ONGC Q1 Results: Net Profit Falls 36%
Oil & Natural Gas Corp.’s profit fell missing estimates in the quarter ended June when a deadlier second wave of Covid-19 hurt fuel demand and stalled a nascent economic recovery.
Net profit of the oil explorer declined 35.6% sequentially to Rs 4,334.8 crore, according to its exchange filing. That compares with the Rs 4,690.2-crore consensus estimate of analysts tracked by Bloomberg.
The sequential decline was amplified as ONGC had reported a one-time gain of Rs 2,613.2 crore in preceding quarter.
ONGC Q1 2021-22 Highlights (QoQ)
Revenue rose 8.6% to Rs 23,021.6 crore, compared with the Rs 23,273.7-crore forecast.
Other income fell 82.9% to Rs 533.7 crore.
Operating profit rose 35% to Rs 11,001.8 crore.
Operating margin expanded to 47.8% from 38.5%.
Total expenditure fell 6.7% to Rs 16,805.1 crore.
Tax expenses rose 10.1% to Rs 2,415.4 crore.
A rise in crude prices aided ONGC’s net oil realisation—the price an explorer earns after subsidies are deducted—in the first quarter. The net crude realisation jumped 13% sequentially to $65.59/barrel. That came as Brent averaged $69.1 a barrel, up 13% over the preceding three months.
But a fall in domestic gas prices weighed on its earnings. The domestic administered gas price declined from $3.7 a metric million British thermal unit in the first half of 2019-20 to $1.8 per mmBtu in the second half of 2020-21. The prices will remain unchanged for the first six months of FY22.
ONGC expects domestic gas prices to rise 50-60% in the second half of FY22.
The domestic natural gas production by the company and its associates declined 4.9% sequentially to 5.31 BCM (billion cubic metres) in the reported quarter. Domestic crude production, too, fell 2.8% over the three months through March to 5.39 MMT.
Shares of ONGC ended almost unchanged before the earnings were announced compared with a 1.08% gain in the benchmark BSE Sensex.