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Why did Oil and Natural Gas Corporation Ltd share price move today?collapse benzinga

Why did Oil and Natural Gas Corporation Ltd share price move today?

Oil and Natural Gas Corporation shares are trading lower after analyst at Morgan Stanley reduce the target to ₹206 from ₹218 while maintaining an Overweight rating.

72% Buy 👍
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Shareholding Info
  • Promoters
    58.89 %
  • Foreign institutions-FII
    7.97 %
  • Other domestic institutions
    21.45 %
  • Retail and other
    2.95 %
  • Mutual Funds
    8.73 %

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About ONGC


The biggest crude oil as well as natural gas company in India, a Miniratna Schedule “A”, a Government of India’s Central Public Sector Enterprise (CPSE), ONGC contributes about 71% to the total Indian domestic production. The primary business that the company employs itself in is oil and gas acreages beyond the boundaries of India. This includes research, development and production of both gas and oil. The raw material is crude oil which is used by companies like BPCL, MRPL, HPCL and IOC so that they can produce petroleum products of which some are Petrol, Kerosene, Diesel, Cooking GAS LPG and Naphtha. The Ministry of Petroleum and Natural Gas has the company under their administrative control.

The Government of India, in 1955, decided to develop the natural gas and oil resources across the various parts of India as a part of the Public Sector development. With this in practice, in 1956, ONGC was formed, originally as a commission, which later became a company engaged in the production and sale of petroleum products.

The company has a unique distinction as being the only one that has in-house capabilities of service in all the areas of research and production of gas and oil as well as related oil field services. This public sector enterprise boasts a competent team of over 27,000 employees that work around the clock in varied and challenging locations and have even won the Best Employer Award.

The Oil and Natural Gas Corporation Videsh holds, within 15 countries, 35 oil and gas assets and produces about 30.3% oil and 23.7% oil and natural gas in the total domestic production of the country. Their other subsidiaries include Mangalore Refinery and Petrochemicals Limited (MRPL) and HPCL.


Core Activities & Products


Being the largest Indian oil and gas company which produces natural gas, crude oil and value-added products, the principal products delivered by the company are crude oil and natural gas. With these production of products that are destined to be in the Indian market are:

  1. Petroleum - Petrol and Diesel
  2. Natural Gas - Cooking gas (LPG)
  3. LNG
  4. Lubricants
  5. Electricity
  6. Petrochemicals


Board of Directors


  1. Dr. Alka Mittal: Director (HR) and Chairman & Managing Director - Additional Charge
  2. Rajesh Kumar Srivastava: Director (Exploration)
  3. Om Prakash Singh: Director (T&FS)
  4. Anurag Sharma: Director (Onshore)
  5. Pankaj Kumar: Director (Offshore)
  6. Pomila Jaspal: Director (Finance)
  7. G. Srinivas: Additional Secretary and Financial Advisor
  8. Syamchand Ghosh: Independent Director
  9. V Ajit Kumar Raju: Independent Director
  10. Manish Pareek: Independent Director
  11. Reena Jaitly: Independent Director
  12. Dr. Prabhaskar Rai: Independent Director
  13. Dr. Madhav Singh: Independent Director


Key Executives


  1. Dr. Alka Mittal: Director (HR) and Chairman & Managing Director - Additional Charge
  2. Rajesh Kumar Srivastava: Director (Exploration)
  3. Om Prakash Singh: Director (T&FS)
  4. Anurag Sharma: Director (Onshore)
  5. Pankaj Kumar: Director (Offshore)
  6. Pomila Jaspal: Director (Finance)
  7. G. Srinivas: Additional Secretary and Financial Advisor


Presence


Registered Office:Nelson Mandela Road, Plot No. 5A- 5B, Vasant Kunj, New Delhi - 110070

Strengths


The strengths of the company that have affected the ONGC share price are:

  1. The market share supplied by the company includes over 30% of all of India’s crude oil requirement, over 70% of the crude oil output in the country and over 80% of the country’s natural gas production.
  2. The brand name of the company is very strong and it is known for high profit margins as well as revenues.
  3. The company’s business model is perceived to be very robust and their marketing strategy has naturally increased the perception of the brand in the general public’s eye.
  4. The corporation is very successful in the natural gas market as it is the best company in India in this sector.
  5. The company has been organically expanding into gas transportation.
  6. The company is backed by the Government of India and also has strong financial backing.


CSR and Sustainability


The CSR budget that has been prescribed by the company is over Rs. 500 crore every year, in which the Government mandates and expenditure of 33% of the budget in ‘Swachh Bharat’ projects. The company has already identified 20 aspiration districts where they are committed to implementation of strategic CSR projects that can help raise the social as well as economic condition of the districts. Some of these are mentioned below, diversified by categories like health care, skill development, education, rural development and Swachh Bharat projects.

  1. Health Care:
    1. A Multi-Speciality Hospital instating 300 beds in the North East.
    2. National Cancer Institute in Nagpur with 455 beds.
    3. Exclusive door step treatment for the elderly in the remote villages of the country. There are currently 31 units in 9 states.
    4. ONGC - MRPL Lady Goschen Hospital in Mangalore for prenatal and postnatal care.
    5. For the visually impaired, distribution of spectacles in Ahmedabad.
    6. Medical equipment and infrastructure provided to Trimurti Hospital Balwa near Ahmedabad.
    7. Renovation and upgradation of Sree Sudheendra Medical Mission hospital in Ernakulam, Kerala.
  2. Skill Development:
    1. As a part of the Petroleum Sector Skill initiative, a Skill Development Institute in Ahmedabad.
    2. Skill development projects for training in retail, hospitality and fashion in Jammu and Kashmir, with active support from the Indian Army.
    3. Project Green Hub, where 20 youths are trained every year in wildlife photography.
    4. Empowering the women of Assam through the craft of Water Hyacinth.
    5. Welding and Gas Cutting skilling in Assam.
    6. Hospitality training in NorthEast and Uttrakhand.
    7. Plastic Technology skill development in Tripura, West Bengal, Rajasthan, Delhi and Odisha.
  3. Education:
    1. 970 Ekal Vidyalayas.
    2. ONGC Super 30 - an engineering entrance coaching institute in Assam.
    3. Education infrastructure development in NorthEast.
    4. Partnered with Sanskrit Promotion Foundation to develop content for CBSE and help promote the language.
    5. Built hostel in Tapas P.U. College in Bangalore.
  4. Rural Development:
    1. Rural infrastructure development in Arunachal Pradesh.
    2. Organic Farm Training Centre at Telangana.
    3. Solar rooftops for electricity in Silchar District, Assam.
    4. Documentation Centre in Roing, Arunachal Pradesh.
    5. Digital education for over 500 schools in India.
    6. 19 check dams, 5 community tubewells, 5 community wells, agri-dairy and farming models in 5 villages, 60 anganwadis, IHHLs in 8 villages and more across 20 districts of India.
  5. Swachh Bharat Projects:
    1. Clean drinking water facilities and open defecation free initiatives.
    2. Clean Himalayas Initiative.
    3. Revival of ancient river - Saraswati.
    4. Restoration of Heritage Sites.
    5. Street lighting in remote villages.
    6. Cleaning Sabarmati river bank.
    7. Promotion of menstrual hygiene under Project Sakhi.
    8. Providing shoes to the weaker sections of society under Green Sole.
    9. A Bio-CNG plant in Haridwar.


Criticism


The company has been criticised in the past for making slow decisions through management as it is a government owned organisation. Also, there are investors that believe that the market share growth is constrained, as the profitability ratio as well as the net contribution percentage are lower as compared to industry standards. Another important fact to know is that the R&D investment put up by the organisation is lower than its competitors and they lack the newest technology.


COVID-19 Impact


When the lockdown first came around, the company faced a sudden dip in revenues as the Government of India declared their products - oil, gas and petroleum as essential services. While ONGC continued to produce and supply the crude oil and natural gas required, there was less offtake by some of the customers which caused marginal reduction in the sales. The share market financial results for the quarter were impacted by this pandemic and due to the very volatile global crude oil market. But, as per the organisation, the gas offtake was restored to normal pre-pandemic levels as soon as the lockdown was lifted and companies began their operations again.


Future Prospects


The company, ONGC is now planning to expand into the export of their products into the global market as the rising fuel and oil prices are suggestive of higher profit margins for the company. They are researching to discover more oil wells. This market development is definitely going to help now only raise the revenues earned by the corporation but also help dilute the competition. 

Did You Know!


The Oil and Natural Gas Corporation of India is an Indian company and is one of the biggest publicly traded companies as per market capitalization in the country as well as the biggest Indian based company measured solely by profits. The headquarters of the company are located in Delhi. Interestingly, they are also ranked the third Oil and Gas (E&P) company in the world and have one of the largest ERP implementations in Asia. As a matter of fact, even in the stock market, after turning MRPL from being a stretcher case for the BIFR to being the BSE Top 30 within a year, the company was setting big records.


Initial Public Offering


The IPO of the corporation was released on the National Stock Exchange (NSE) in March, 2011, as well as listed on BSE, where the base ONGC stock price was set at a price range of Rs. 750 per share with a minimum investment of Rs. 7,500. The face value per ONGC stock price was Rs. 10 while the lot size was 10 shares. The issue size of shares of Rs. 10 was Rs. 10,694.5 crore and these were all offered for sale. This IPO was promoted by the iPresident of India acting through the Ministry of Oil and Natural Gas of India. Overall, the IPO was very successful.


Equity Shares


The company shares have approximately 1% weightage in the Nifty50 as they are a Public Sector Company, wherein the Government of India is the promoter and maximum shareholder. Recently, an impact was there on the ONGC share price when they made headlines during the Ukraine war. The ONGC stock price rallied Rs. 156 per share to about Rs. 195 per share, which was a straight jump of 24% in 10 trading days. Post this, there was a tax hike at the start of July. An excise duty of Rs. 23,250 was levied on every tonne of crude oil produced. There was also a hike in export taxes for petrol, diesel and ATF. The ONGC stock price fell 25% from Rs. 155 to Rs. 121. Both these absolute opposite effects prove that the business is a volatile one, which is affected by a lot of factors. In the last 5 years and 3 years, the ONGC stock price have fallen by 23% and 15% respectively. In the last year, they rose by 9%, but looking at just their 6 month performance, the negative is at 23% and 16% over the last month as per being set on 14th July, 2022.


Annual Financial Summary


 
BALANCE SHEET OF OIL AND NATURAL GAS CORPORATION (in Rs. Cr.)MAR 22MAR 21MAR 20MAR 19MAR 18
12 mths12 mths12 mths12 mths12 mths
EQUITIES AND LIABILITIES
SHAREHOLDER'S FUNDS
Equity Share Capital6,290.146,290.146,290.156,290.156,416.63
TOTAL SHARE CAPITAL6,290.146,290.146,290.156,290.156,416.63
Reserves and Surplus230,857.95198,268.43188,047.94196,702.40186,968.05
TOTAL RESERVES AND SURPLUS230,857.95198,268.43188,047.94196,702.40186,968.05
TOTAL SHAREHOLDERS FUNDS237,148.09204,558.57194,338.09202,992.56193,384.68
NON-CURRENT LIABILITIES
Long Term Borrowings6,396.906,327.522,245.100.000.00
Deferred Tax Liabilities [Net]19,733.2527,473.3726,344.1028,070.3826,259.16
Other Long Term Liabilities7,198.3912,729.055,247.24830.26920.65
Long Term Provisions30,186.2430,535.1827,939.2123,624.7421,301.84
TOTAL NON-CURRENT LIABILITIES63,514.7977,065.1261,775.6452,525.3848,481.64
CURRENT LIABILITIES
Short Term Borrowings0.008,695.1411,704.0121,593.5725,592.21
Trade Payables6,154.736,376.657,113.638,825.007,334.55
Other Current Liabilities27,099.7520,372.2820,651.8414,712.6515,176.91
Short Term Provisions3,346.891,385.831,097.531,585.661,258.19
TOTAL CURRENT LIABILITIES36,601.3736,829.9040,567.0246,716.8849,361.86
TOTAL CAPITAL AND LIABILITIES337,264.24318,453.58296,680.75302,234.81291,228.18
ASSETS
NON-CURRENT ASSETS
Tangible Assets136,753.20130,482.51127,518.10124,244.66119,515.55
Intangible Assets182.40217.25180.96174.46112.86
Capital Work-In-Progress28,753.6824,811.2920,016.5815,523.5413,545.06
Other Assets0.000.000.000.000.00
FIXED ASSETS178,906.31171,648.84163,924.60159,469.35155,012.00
Non-Current Investments85,173.2281,376.4472,429.9984,881.5485,730.80
Deferred Tax Assets [Net]0.000.000.000.000.00
Long Term Loans And Advances26,077.631,327.411,182.481,046.132,133.47
Other Non-Current Assets11,180.6232,323.4432,157.6928,447.4526,835.36
TOTAL NON-CURRENT ASSETS301,337.76286,676.13269,694.75273,844.46269,711.63
CURRENT ASSETS
Current Investments0.000.000.000.000.00
Inventories7,861.428,474.478,566.627,749.176,688.91
Trade Receivables11,788.487,797.334,777.398,439.967,772.64
Cash And Cash Equivalents236.23302.55968.23504.061,012.70
Short Term Loans And Advances244.22383.47511.73633.931,402.12
OtherCurrentAssets15,796.1214,819.6312,162.0311,063.234,640.19
TOTAL CURRENT ASSETS35,926.4831,777.4526,986.0028,390.3521,516.55
TOTAL ASSETS337,264.24318,453.58296,680.75302,234.81291,228.18
OTHER ADDITIONAL INFORMATION
CONTINGENT LIABILITIES, COMMITMENTS
Contingent Liabilities84,271.4191,576.9195,668.0293,825.4270,218.62
CIF VALUE OF IMPORTS
Raw Materials0.000.000.000.000.00
Stores, Spares And Loose Tools0.000.000.000.000.00
Trade/Other Goods0.000.000.000.000.00
Capital Goods0.000.00321.01374.82348.27
EXPENDITURE IN FOREIGN EXCHANGE
Expenditure In Foreign Currency16,768.3921,851.2517,973.6619,198.2916,924.69
REMITTANCES IN FOREIGN CURRENCIES FOR DIVIDENDS
Dividend Remittance In Foreign Currency----------
EARNINGS IN FOREIGN EXCHANGE
FOB Value Of Goods----1,015.962,940.853,364.43
Other Earnings190.59239.34609.46286.79188.03
BONUS DETAILS
Bonus Equity Share Capital5,947.555,947.555,947.555,947.556,067.14
NON-CURRENT INVESTMENTS
Non-Current Investments Quoted Market Value49,129.6942,586.8234,042.1961,714.0272,172.17
Non-Current Investments Unquoted Book Value17,325.2128,088.4621,789.9618,123.1618,168.64
CURRENT INVESTMENTS
Current Investments Quoted Market Value----------
Current Investments Unquoted Book Value----------
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