Analyst Research Report Snapshot

Title:

ONGC (ONGC) - Qtr. Update - Dated - November 13, 2013

Price:

$46.00

Provider:

Axis Capital Limited

Date:

14 Nov 2013

Pages:

5

Type:

AcrobatPDF

Companies referenced:

ONGC.NS

Available for Immediate Download
Summary:

ONGC’s Q2FY14 PAT at Rs 60 bn was lower than our estimate (Rs 66 bn) due to lower oil and gas production (~3% lower vs. estimate) and higher dry well write-off (Rs 21 bn vs. Rs 15 bn expected). Delay in ramp-up of new fields (D-1, B-1, B-193) impacted production. Play reforms through upstream stocks (ONGC, OINL) Despite 50% upstream subsidy share in FY15E (vs. 38% in FY13), ONGC/ OINL would show EPS CAGR of 21%/ 5% over FY13-15E. Earnings will also benefit from (a) gas price hike, (b) production growth, and (c) weak INR. Hence we recommend playing fuel reforms through upstream. We prefer ONGC over OINL due to better production growth visibility, OVL contribution. Maintain BUY on ONGC with TP of Rs 360 (34% upside). At CMP of 268, the stock trades at 8x FY14E EPS of Rs 34 and 6x FY15E EPS of Rs 42. ONGC – Production growth finally coming Our detailed project-by-project analysis reveals ONGC would realize crude oil production growth of 0.7%/ 3.7% in FY14E/15E. Despite missing ONGC’s aggressive guidance (4.3%/5.5% in FY14/15), reversal of production decline is positive. Medium term earnings will be driven by gas price hike, weak INR and higher production from OVL. Valuation is attractive with 1-year forward P/E of 6x. Key Assumptions: Crude at US$ 110/ bl for FY14 and US$ 105/ bl for FY15. INR/USD at 62 for FY14 and 64 for FY15. Regards, Amit Mishra, CFA (Sr VP – Energy) Institutional Equity Research Axis Capital Limited Tel: +91 22 4325 1142 Prashant Tarwadi (VP – Energy) Institutional Equity Research Axis Capital Limited Tel: +91 22 4325 1113

Why buy analyst research?

  • Institutional quality research
  • Available for Immediate Download
  • Detailed company or industry insight
  • Print or save
  • 24 hour customer support
Return to previous page without adding this item to your cart.
Email Customer Support.

About Analyst Research

Analyst research reports are available for immediate download after purchase. You will have unlimited access to the report for 24 hours after purchase, to download, print or save it as many times as you wish. Analyst Research provided by Reuters does not constitute investment advice, and is not endorsed by Reuters Research. This information is protected by copyright and intellectual property laws. More information on Analyst Research.