Fall In Subsidy Burden & Weak Re To Lift Bottomline In Q4
INDIA’S largest petroleum producer ONGC is expected to post a substantial rise in profits for the fourth quarter of FY09 helped by a sharp fall in its subsidy burden and a weak rupee. The analysts expect the fourth quarter standalone profits to jump 45% to Rs 3,800 crore.
ONGC, which publishes its results on Wednesday, could emerge as the only listed Indian company to report over Rs 20,000 crore in consolidated annual profit in FY09. During the first nine months, ONGC’s net profit was 1.1% lower at Rs 13,920 crore compared with the year-ago period.
The company’s contribution to oil marketers, compensating them for selling fuel at subsidised rates, had more than doubled in the first nine months of 2008-09 to Rs 27,400 crore. This is expected to have come down by 90% to around Rs 850 crore in the January-March 2009 quarter. However, ONGC’s net realisation after subsidies in the fourth quarter is estimated at around $45 per barrel, 15% lower compared with the year-ago period.
But the 25% decline in the value of the rupee last fiscal year against the US dollar will help offset the impact of the dollar-denominated fall in ONGC’s net realisations.
“We expect ONGC’s consolidated net profit for FY09 to remain flat against last year. The company’s production is likely to fall and net realisation for the fourth quarter is estimated at $43.7 per barrel. Although we don’t expect any surprises in its subsidiary OVL’s numbers, the rupee depreciation during the year will prove to be a big positive for the company,” said Amitabh Chakraborty, president equity, Religare Capital Markets.
The company, which has been adding to its petroleum reserves through discoveries and an acquisition, has seen its production stagnate over the years. During the March 2009 quarter, ONGC’s crude oil production fell by 6.5% to 6.03 million tonne, although gas output improved by 3% to 5.5 billion cubic metre. For the whole year, ONGC’s standalone oil production is estimated 2.2% lower at 25.4 million tonne. Since the company has to sell its gas at a loss under administered prices, higher production of gas is unlikely to add to its profits. ONGC has since long been asking the government to revise upwards the price of natural gas it sells at a loss under administered prices.
INDIA’S largest petroleum producer ONGC is expected to post a substantial rise in profits for the fourth quarter of FY09 helped by a sharp fall in its subsidy burden and a weak rupee. The analysts expect the fourth quarter standalone profits to jump 45% to Rs 3,800 crore.
ONGC, which publishes its results on Wednesday, could emerge as the only listed Indian company to report over Rs 20,000 crore in consolidated annual profit in FY09. During the first nine months, ONGC’s net profit was 1.1% lower at Rs 13,920 crore compared with the year-ago period.
The company’s contribution to oil marketers, compensating them for selling fuel at subsidised rates, had more than doubled in the first nine months of 2008-09 to Rs 27,400 crore. This is expected to have come down by 90% to around Rs 850 crore in the January-March 2009 quarter. However, ONGC’s net realisation after subsidies in the fourth quarter is estimated at around $45 per barrel, 15% lower compared with the year-ago period.
But the 25% decline in the value of the rupee last fiscal year against the US dollar will help offset the impact of the dollar-denominated fall in ONGC’s net realisations.
“We expect ONGC’s consolidated net profit for FY09 to remain flat against last year. The company’s production is likely to fall and net realisation for the fourth quarter is estimated at $43.7 per barrel. Although we don’t expect any surprises in its subsidiary OVL’s numbers, the rupee depreciation during the year will prove to be a big positive for the company,” said Amitabh Chakraborty, president equity, Religare Capital Markets.
The company, which has been adding to its petroleum reserves through discoveries and an acquisition, has seen its production stagnate over the years. During the March 2009 quarter, ONGC’s crude oil production fell by 6.5% to 6.03 million tonne, although gas output improved by 3% to 5.5 billion cubic metre. For the whole year, ONGC’s standalone oil production is estimated 2.2% lower at 25.4 million tonne. Since the company has to sell its gas at a loss under administered prices, higher production of gas is unlikely to add to its profits. ONGC has since long been asking the government to revise upwards the price of natural gas it sells at a loss under administered prices.
FIGURE WATCH
Analysts expect Q4 standalone profits to jump 45% to Rs 3,800 cr For the first nine months, ONGC’s net profit was 1.1% lower at Rs 13,920 cr Co’s contribution to oil marketers had more than doubled in the first nine months to Rs 27,400 cr
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