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9 Key Facts about World’s 3rd largest Oil & Gas (E&P) Company, ONGC

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ONGC

Oil and Natural Gas Corporation Limited or ONGC as it is known commonly is Indian state-owned oil and Gas Company. ONGC produces around 77% of India’s total crude oil production and 81% of natural gas production. ONGC is one of the largest publicly traded companies by market capitalization in India and the largest India-based company measured by profits. The Company is headquartered in New Delhi, India.

9 Key Facts about ONGC

  1. The only fully–integrated petroleum company in India, operating along the entire hydrocarbon value chain
  2. Holds largest share of hydrocarbon acreages in India
  3. Refining capacity of about 12 MMTPA
  4. Created a record by turning Mangalore Refinery and Petrochemicals Limited from being a stretcher case for referral to BIFR, to the BSE Top 30 within a year
  5. State-of-the-art seismic data acquisition, processing and interpretation facilities
  6. Uses one of the Top Ten Virtual Reality Interpretation facilities in the world
  7. Alliances with Transocean, Schlumberger, Halliburton and Baker Hughes, IPR, Petrobras, Norsk, ENI, Shell
  8. One of the biggest ERP implementations in the Asia
  9. Ranks 3rd Oil & Gas Exploration & Production (E&P) Company in the world.

Read on GWI List of Oil & Gas Companies in India.

Analysis of Financials

Mar-12Mar-11Mar-10Mar-09
Key Ratios
Debt-Equity Ratio0.020.090.20.19
Long Term Debt-Equity Ratio00.090.20.19
Current Ratio0.951.311.731.78
Turnover Ratios
Fixed Assets0.590.580.580.69
Inventory15.3614.4112.7115.42
ROCE (%)28.4124.9325.3827.3
RONW (%)23.8720.4820.221.59

The company’s D/E ratio has improved recently to very strong level. Also the turnover ratios have improved in case of both Fixed Assets and Inventory. The return on Capital Employed and Return on Net Worth has improved largely denoting strong performance on the company’s operations.

Key Ratio Analysis

Mar-12Mar-11Mar-10Mar-09
Price Earning (P/E)9.6114.0115.0611.14
Price to Book Value ( P/BV)2.022.552.692.12
EV/EBIDTA5.597.868.896.41
Market Cap/Sales2.973.623.92.61

The P/E ratio has decreased significantly as compared to last year. This symbolizes the investors’ confidence in the stock has reduced to a great extent and the company’s stock performance has deteriorated as compared to last year.

Read more about Advantages & Disadvantages of Oil.

Future Outlook

So far the company’s performance has been good. Now moving ahead company is focusing on the following key strategies for growth and further development:

  • New Discoveries and development – Company is planning to leverage its art technology so as to succeed in new discoveries which will help it in fast track development. Company is also planning to implement some of the best global practices so as to succeed internationally
  • Equity Oil from Abroad
  • New Sources of Energy – Company is looking for new sources of energy as an alternative, since the amount of oil is limited in the earth’s crust
  • Downstream Value Additions & Forward Integration – Company is planning for forward integration development and acquisition, so that it can reduce its cost of marketing, sales, etc. and help improve profit margin to a greater extent
  • Production from small and marginal fields – The Company is planning to look for production from small oil fields as well.

There is a huge gap between demand and indigenous supply of gas, which is met through import of Liquefied Natural Gas (LNG). As far as domestic production is concerned, the supplies from KG basin have been declining in the last one-year and are expected to dip further. Total overall demand of Natural gas is expected to reach 473 MMSCMD by FY’17 from 293 MMSCMD in FY’13. Margin is expected to fall in FY’13 mainly due to supply constraints and regulatory orders resulting into lower tariffs which is further expected to decline in FY’14.

(Few excerpts are taken from Capitaline Research and Database)

PG

Niraj Satnalika

Niraj is an MBA in International Business (Finance). Prior to this he completed B.Tech in Electronics and Instrumentation. He is currently working with Confederation of Indian Industry (CII), Kolkata in capacity of Consultant. Satnalika is actively involved with an NGO and works towards promoting education among the underprivileged.

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