ONGC’s Financial And Equity Research
-From an invertors point of view
PRESENTED BY: LAISH ROY
MMS FINANCE
ROLL NO:69
COMPANY
PROFILE
•Formed in 1959 Oil and Natural Gas Corporation Ltd.(ONGC)
engaged in oil exploration and production activities contributes
78% of India’s oil and gas production.
• ONGC is the highest profit making PSU’s and it is the largest
company among the Navratnas.
• ONGC produces about 30% of India's crude oil requirement. It
owns and operates more than 11,000 kilometers of pipelines in
India.
Industry: Oil and Gas
Products :Petroleum Natural Gas And Petro
Chemicals
Competitors:
•Cairn India
•GAIL
•Oil India
•Petronet LNG
•Guj State Petro
•Reliance Natural
•Indraprastha Gas
•Guj Gas
•Aban Offshore
Performance Highlights FY’10
• Total 21 Discoveries made in FY’10 which include 11
New Prospects (1 Deep water, 3 Shallow water, 7
Onshore) and 10 New pools (6 onshore, 4 offshore).
• ONGC’s ultimate reserve accretion of 82.98 MTOE
from domestic acreages is highest in 20 years.
• Subsidy payout of Rs.4,999 Crore as compared to Rs.
852 Crore in Q4FY’09. On annualized basis, subsidy
payout of Rs.11,554 Crore as compared to Rs. 28,225
Crore in FY’09.
NET WORTH
The above figure shows the Net-worth of ONGC from the year 2005-06 till
2008-2009. Net worth means the sum of shareholder’s funds, reserves and
surplus less the fictitious assets. Net worth above shows an upward trend year-
on-year. The Net worth has increased at an astounding rate of over 145% during
the above shown years. Therefore it can be understood that the shareholders
and the promoters have great confidence in the company. This shows that the
company is in a very strong position which is a very encouraging sign to the
investors.
DIVIDEND
Dividend:
Recommended
payout of Rs.
33 per share
(including
interim
dividend Rs. 18
per share)
aggregating to
Rs. 7,058 Crore
(FY ’09- Rs,32
per share
aggregating to
Rs 6844 crore)
Dividend is the amount of money paid by any company to its
shareholders as a share of the profit to the investors. The dividend paid out by
ONGC is the best among any other PSU in India. According to the Press release
made by ONGC in 2008, it is the corporate which has paid the highest amount as
divided to its shareholders ever, in India. However latest financial reports for 2009-2010
show a dividend pay out of 330%.
NET PROFIT
Net Profit of
Q4FY’10
increases 71%,
from Rs 2,207
Crore to Rs.
3,776 Crore.
Annual net
profit of ONGC
increases 4%,
from Rs. 16,126
Crore to
Rs.16,768 Crore
in FY’10.
Net profit in simple terms means money left over after paying all the expenses of
an organization. In the above data you can see that the Net profit made by ONGC
has been consistently increasing. From 2005-06 to 2007-08 the Net profit of ONGC
has grown drastically. However in the year 2009-10 profits show a decline due to
the increase the provision for subsidies. The increase in Net profit also boosts the
investor confidence and this in in-turn increases the share holder’s funds.
TURNOVER
The turnover of ONGC Group has crossed the 1 Trillion mark in 2007-08.
This shows that it is a fast growing organization and it has very high sales.
The growth in turnover of ONGC from 2005-06 to 2008-09 is about 145%.
The growth in turnover shows that the investors can invest in the
company without fear.
Valuation
• P/E ratio = 16.81 (27/8/10)
• EPS = 78.39 (Mar 10)
• Equity Divd. = 330% (Mar 10)
• Net Profit margin = 23.50% (Mar 09)
• Return on Equity = 20.65% (Mar 09)
• Live BSE Quotes | NSE Quotes (Aug 27,2010)
1317.65 Rs | 1318.20 Rs
Benefits of investing in Ongc
Dividends: The values shared are higher than what is
normally provided by other companies listed
Stable values: its development is consistent; the
investor can be assured that there will be no major
shocks in their trading.
Low volatility: These companies are strongly
consolidated thus its volatility is very low. It's not
suitable for speculative operations or intraday
ONGC is a market leader, who is strongly
established with stable business growth.
They are usually recommended by the brokers and
intermediaries, and are also present in the portfolios of
many financial institutions.
Disavantages
The biggest disadvantage to own ONGC stocks is
their high price per share.
The values don't shoot up as high and fast as other
stocks because speculation doesn't work well with
them.
They are not quite suitable for intraday operations.
Chart view of ONGC share price
Conclution
Thank You
