Oil and Natural Gas Corporation (ONGC) shares gained as much as 3.92 per cent on Thursday after the company on Wednesday reported better-than-estimated results for the quarter ended June 30, 2016. For April-June period, net profit of ONGC stood at Rs 4,232.54 crore, down 21.16 per cent, against Rs 5,362.36 crore in the same quarter last year. Net sales of the company fell by 21.46 per cent year-on-year to Rs 17,670.37 crore for the quarter under review against Rs 22,498.75 crore in the same quarter last year. At 10.15 am, shares of ONGC were trading 2.57 per cent up at Rs 251.40. The scrip opened the day at Rs 249.50 and has touched a high and low of Rs 254.70 and Rs 247.85, respectively, in trade so far. Benchmark BSE Oil & Gas index was trading 0.45 per cent up at 11,121.86.
According to Edelweiss Securities, ONGC’s Q1FY17 net profit stood 25 per cent ahead of estimate on account of lower expenditure. Production decline continued with oil production missing estimate, while gas came slightly ahead. Management guided gas production to improve as new projects are commissioned. Furthermore, current trend of low opex will continue as new contract and rig rates are down. Lower domestic gas price in the second half of 2016-17 will cap benefits of oil recovery. However, higher oil and gas prices portend brighter prospects from FY18. The current market price is discounting undemanding $45 per bbl long-term oil. The brokerage house maintained ‘Buy’ on ONGC shares with a target price of Rs 288.
Operating profit of ONGC fell by 18.39 per cent year-on-year to Rs 9382.87 crore for the quarter ended June 30, 2016 against Rs 11497.49 crore in the same quarter last year.
Later, the scrip closed 0.47 per cent up at Rs 246.25.