ONGC soars 5%, hits fresh 32-month high post Q3 results, high oil prices

In Q3FY22, ONGC's net profit jumped 597 per cent YoY to Rs 8,764 crore, as against Rs 1,258 crore in the corresponding quarter of previous fiscal (Q3FY21).

Shares of Oil & Natural Gas Corporation (ONGC) hit a fresh 32-month high at Rs 176.40, on rallying 5 per cent on the BSE in Monday’s intra-day trade as oil prices hit their highest in more than seven years on fears a possible invasion of Ukraine by Russia.

Meanwhile, the state-owned oil exploration & production company on Saturday reported nearly seven-fold jump in December quarter (Q3FY22) net profit after higher oil and gas prices offset a drop in production.

The stock surpassed its previous high of Rs 174.80 touched on January 31, 2022.  It traded at its highest level since May 2019. At 10:11 am; ONGC traded 2 per cent higher at Rs 171.10, as compared to 1.9 per cent decline in the S&P BSE Sensex.

In Q3FY22, ONGC’s net profit jumped 597 per cent year-on-year (YoY) at Rs 8,764 crore, as against Rs 1,258 crore in the corresponding quarter of previous fiscal (Q3FY21). Revenue in the quarter under review was up 67.3 per cent YoY to Rs 28,474 crore.

ONGC has drawn up plans to increase its capex spend in the next few years. A major part of this spend will be on exploration with acquisition of new acreages; use of latest technology in seismic data acquisition, Processing and Interpretation (API) and on development and infrastructure projects for fast tracking the monetization of discovered resources. ONGC is also in the process of incorporating a wholly owned subsidiary to focus and grow its gas business, the management said.

“Although the ramp up in oil and gas production has been a sore issue for investors, the rise in oil and gas prices is likely to result in FY24E adjusted profit after tax (PAT) being 1.7x that of FY21. Ramp up of production from the KG basin could be another positive trigger for the ONGC stock,” analysts at Motilal Oswal Financial Services said in oil & gas sector update. The brokerage firm recommend a Buy on the stock, raising target price to Rs 210 from Rs 195/share.

In the past six months, the stock of ONGC has outperformed the market by surging nearly 50 per cent, as compared to 3 per cent rise in the S&P BSE Sensex.