ONGC reported a 2Q profit of Rs53.9bn (up 47% sequentially, 6% y/y), marginally ahead of our estimates, as the full benefit of the APM gas price hike along with a lower subsidy payout accrued this quarter. However, the higher-than-expected dry well write off of INR24.4bn (+273% yoy, +178% qoq) led to a lower net profit than estimated. Crude oil production (+3.3% YoY, +4% QoQ) and sales volumes (+6.5% YoY, +11% QoQ) were higher both sequentially and on a yoy basis.
ONGC’s 2Q EBITDA is up 28% YoY driven by 11% YoY (up 13% in rupee terms) rise in oil price net of subsidy and 118% YoY rise in APM gas price. ONGC contributed to c80% in Q2FY11 (82.4% in Q1FY11) of the total subsidy borne by government-owned upstream companies.
ONGC’s standalone oil volumes fell 2% yoy but overall oil volume was up 3% yoy from its share in Rajasthan production, which more than offset the impact of
an unplanned shutdown in Panna Mukta fields. ONGC’s gas volumes also fell 3% yoy from this shutdown.
ONGC Target Prices by various FIIs are between 1410 to Merill's extremely bullish target of Rs 1700
