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Informist, Friday, Aug. 8, 2025

 

By Anand JC

 

NEW DELHI – Oil and Natural Gas Corp. Ltd.'s operating profit for the June quarter is expected to take a knock on a year-on-year and quarterly basis due to lower oil price realisation as Brent crude prices have tumbled, according to analysts. Consequently, ONGC's net profit for the quarter is expected to contract year-on-year for the third consecutive quarter.

 

The upstream oil company's net profit is expected to fall 12% on year to INR 78.8 billion in Apr-Jun, according to the average of estimates from 10 brokerages. Estimates vary widely, ranging from INR 65.3 billion by JM Financial Institutional Securities to INR 95.9 billion by Prabhudas Lilladher.

 

The state-owned company's net profit had fallen 35% on year in the March quarter due to lower oil price realisation, even as output was subdued. Analysts expect a similar outcome in the June quarter.

 

ONGC's top line will likely fall 12% on year to INR 309.8 billion, according to the average of estimates. JM Financial has the lowest expectation for revenue at INR 249 billion while Dolat Capital Market has the highest at INR 333.3 billion.

 

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. The upstream player primarily earns revenues through the production and sale of crude oil and natural gas.

 

Analysts largely expect ONGC's oil and gas production for the reporting quarter to have remained flat while some see a contraction. The company's oil production on a standalone basis likely declined 4% on year, excluding output from KG-98/2, Kotak Institutional Equities said in a note. KG-98/2 is an exploratory field in the Krishna-Godavari basin in Andhra Pradesh. Including KG-98/2, oil output likely increased 1% on year, Kotak said.

 

ONGC will likely report an earnings before interest, tax, depreciation, and amortisation of INR 172.0 billion, according to the average of estimates. This will translate to a contraction of nearly 8% on year and 10% on quarter. Nuvama Wealth Management has the lowest forecast for EBITDA at INR 162.0 billion and Prabhudas Lilladher has the highest at INR 187.6 billion.

Nuvama expects EBITDA to fall 13% on-year due to a likely 5% on-year decline in crude production and 6?ll in gas production. ONGC's EBITDA is also expected to be negatively impacted by a drop in crude oil prices. Brent crude prices averaged at $67.8 per barrel in the June quarter, down over 20% from $84.9 in the year-ago quarter.

 

This fall in oil prices could mean the company's realisation from crude oil sales fell to the lowest level since the March quarter of 2020-21 (Apr-Mar), according to Motilal Oswal Financial Services. The brokerage expects ONGC to register oil realisation of $65 per barrel, down from $83 in the year-ago quarter and $74 in the March quarter.

 

The fall in the energy behemoth's EBITDA could be limited by a rise in gas price realisation. Kotak expects gas price realisation to increase on higher sales of gas priced under the administrative pricing mechanism, in addition to further conversion to new well gas. However, gains from this could also be limited. "We see limited change in effective gas realisations with a cap of USD 6.75/MMBtu (million British thermal units) for Apr-May'25, which was reduced to USD 6.41/MMBtu in Jun'25," ICICI Securities said. The government had made this change early in June before reverting back to $6.75 at the end of the month, which would reflect in the September quarter financials.

 

Friday, shares of ONGC closed 0.2% lower at INR 233.44 on the National Stock Exchange. The company's share prices have fallen about 6% since announcing the March quarter earnings.

 

Of the 14 brokerage recommendations on the company available with Informist, 11 have a buy call at an average target price of INR 296 per share. One brokerage has recommended holding the share and two have recommended selling it.

 

Following are the Apr-Jun earnings estimates for Oil and Natural Gas Corp. based on reports from 10  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)
Prabhudas Lilladher Pvt Ltd	3,22,000.00	95,900.00	1,87,600.00
Dolat Capital Market Pvt Ltd	3,33,288.00	91,089.00	1,73,716.00
YES Securities (India) Ltd	3,21,818.00	82,593.00	1,83,722.00
Emkay Global Financial Services Ltd	3,18,702.00	80,603.00	1,63,237.00
ICICI Securities Ltd	3,22,800.00	78,100.00	1,74,600.00
Kotak Institutional Equities	3,14,724.00	77,301.00	1,68,870.00
Motilal Oswal Financial Services Ltd	3,03,800.00	76,800.00	1,65,900.00
Nuvama Wealth Management Ltd	2,91,560.00	70,525.00	1,62,021.00
Antique Stock Broking Ltd	3,20,294.00	69,878.00	1,76,882.00
JM Financial Institutional Securities Pvt Ltd	2,49,046.00	65,262.00	1,63,749.00
Average	3,09,803.20	78,805.10	1,72,029.70

End

 

Edited by Saji George Titus

 

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