ONGC, Oil India stare at steep earnings cut as crude price crashes

Covid-19 onslaught on crude oil prices to impact profitability of the two oil producers severely; analysts cut ONGC's FY21 earning estimate by 70 per cent

Domestic oil majors- ONGC and Oil India- maybe trading 15-20 per cent higher, compared to their 52-week lows seen last month, but the challenges regarding their earnings persist and investors need to be cautious. With crude oil prices crashing, the profitability of the two companies is expected to be severely hit.

Being a play on crude oil prices and with Brent crude trading below $30 a barrel, ONGC and Oil India may not be in a position to recover their cost of production. Nilesh Ghughe, analyst at HDFC Securities, estimates including expenses for maintaining the production level (capex), ONGC’s cost of