Earnings Outlook
ONGC revenue, net profit seen down on year on output fall
This story was originally published at 19:41 IST on 20 May 2025
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By Anand JC
MUMBAI - Oil and Natural Gas Corp. Ltd. is expected to report a year-on-year fall in its top line and bottom line in the March quarter owing to a fall in oil and gas output, according to analysts. The state-owned company's net profit is expected to fall 13% on year to INR 85.8 billion for the March quarter, according to the average of estimates of nine brokerages.
The estimates on net profit range from INR 79 billion by Emkay Global Financial Services to INR 96.8 billion by Kotak Institutional Equities. ONGC will report its earnings on Wednesday.
ONGC's revenue is seen falling 2.7% on year to INR 337 billion. ONGC derives the bulk of its standalone revenue from the sale of crude oil.
ONGC is expected to report an earnings before interest, taxes, depreciation, and amortisation of INR 183.5 billion for the March quarter, as per the average of estimates. ONGC had reported an EBITDA of INR 174.1 billion in the base quarter and INR 189.7 billion in the December quarter.
ONGC's EBITDA could grow around 5% year-on-year in the March quarter as the government had scrapped the pandemic-era windfall tax on crude oil sales in December. In the base quarter, the company paid statutory levies of $6.7 per barrel to the government.
Kotak expects ONGC's EBITDA to increase around 11% on year driven by higher net oil and gas price realisations and a weaker rupee, partly offset by weaker volumes. However, its EBITDA is expected to contract sequentially due to higher operating expenditure, survey costs, which were partly offset by lower dry well write-offs, Emkay said in a note.
PRODUCTION EXPECTATIONS
Analysts largely expect ONGC's crude oil output to fall in the March quarter, both on year and sequentially. ONGC's crude oil output in the year-ago quarter was 5.36 million tonnes, which fell to 5.24 million tonnes in the December quarter.
ICICI Securities expects ONGC's crude oil output to fall around 3% on year in the March quarter, whereas Nuvama Institutional Equities has forecast a 4% on year fall. Kotak has forecast ONGC's oil production to fall 2% on year. In contrast, Emkay expects the output to increase to 5.39 million tonnes.
ONGC contributes to a little over 80% of India's natural gas production. Its gas output is also expected to have largely fallen in the March quarter. ONGC's natural gas output both a year ago and a quarter ago was 5.1 billion cubic metres. Kotak expects ONGC's natural gas volumes to fall 1% on year and 4% sequentially, while Nuvama has forecast a 5% on year and sequential decline. ICICI Securities expects the gas output to fall marginally.
NET REALISATIONS
ONGC is expected to have benefited from the uptick in crude oil prices in the March quarter. JM Financial Institutional Securities expects ONGC's net realisation to be higher by $1 per barrel sequentially in the March quarter at $72-74 per barrel. Prices of Brent crude oil averaged at $75.7 per barrel in the reporting quarter, compared with $74.7 in the December quarter, it said.
Kotak expects ONGC's average gas price realisation for the March quarter to be $6.8 per million British thermal units, 5% higher on year, due to reclassification of administered pricing mechanism gas to new well gas. Gas drilled from old wells and sold to companies on a nomination basis is called APM Gas, or gas sold using the administered pricing mechanism. This gas is priced at 10% of the monthly average rate of India's crude oil basket, but the price is capped at a ceiling of $6.75/mBtu, higher than the previous cap of $6.5/mBtu.
As per news reports, ONGC recently saw a drop in natural gas production from ageing fields that supply compressed natural gas and piped cooking gas. ONGC offset this fall from gas found in new wells.
New well gas, on the other hand, is priced at 12% of the monthly average rate of India's crude oil basket, given the higher cost incurred to drill. ONGC's share of new well gas is expected to increase to 20% of the total. ONGC began billing for new well gas from September last year. It expects around 20% of gas production from the new wells in 2025-26 (Apr-Mar), rising to around 100% by 2030, Jefferies said in a note on Mar. 27. This will continuously improve realisations and revenue of the company.
ONGC had reported its December quarter earnings on Jan. 31. Since then, its share prices have fallen 5%. Tuesday, shares of ONGC ended at INR 249.26 on the National Stock Exchange, up 1.1%.
ONGC is India's largest oil and gas exploration and production company. It accounted for nearly 68% of the total crude oil and natural gas production in India in 2024.
Following are the Jan-Mar earnings estimates for Oil and Natural Gas Corp. based on reports from nine brokerage firms in descending order by the estimate of net profit:
|
Brokerage |
Net sales (in INR mln) |
Net profit (in INR mln) |
EBITDA (in INR mln) |
|
Kotak Institutional Equities |
3,46,026.00 |
96,787.00 |
1,93,105.00 |
|
JM Financial Institutional Securities Pvt Ltd |
3,32,761.00 |
91,525.00 |
1,90,259.00 |
|
ICICI Securities Ltd |
3,46,100.00 |
90,400.00 |
1,90,200.00 |
|
Nuvama Wealth Management Ltd |
3,32,276.00 |
84,259.00 |
1,74,354.00 |
|
Nomura Equity Research |
3,36,200.00 |
83,900.00 |
1,86,600.00 |
|
Elara Securities (India) Pvt Ltd |
3,38,871.00 |
83,882.00 |
1,87,895.00 |
|
Motilal Oswal Financial Services Ltd |
3,28,100.00 |
82,500.00 |
1,80,200.00 |
|
Prabhudas Lilladher Pvt Ltd |
3,27,100.00 |
80,200.00 |
1,83,200.00 |
|
Emkay Global Financial Services Ltd |
3,45,210.00 |
79,030.00 |
1,65,378.00 |
|
Average |
3,36,960.44 |
85,831.44 |
1,83,465.67 |
End
Edited by Saji George Titus
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