ONGC - March 2013 Results Preview - Motilal Oswal

- We expect ONGC to report adjusted PAT of INR37b (v/s INR56.5b in 4QFY12 and INR55.6b in 3QFY13). ONGC's PAT is down QoQ due to higher subsidy sharing at INR26b in 4QFY13 v/s INR19b in 3QFY13 (9MFY13 quarterly average of INR20b). ONGC's subsidy sharing has been ad-hoc at USD56/bbl (implied discount at ~USD62/bbl as volumes of condensate plus crude are used) for 9MFY13. However, due to our full year FY13 upstream sharing assumption at 40%, we model a higher share of upstream in 4QFY13E. If sharing is maintained at USD56/bbl, our quarterly PAT will get upgraded by 49% to INR55b.

- We expect ONGC to report 4QFY13E PAT of INR37b (v/s INR55.6b in 3QFY13). We estimate EBITDA at INR85b (down 23% YoY and 24% QoQ).

- We estimate gross realization at USD113.7/bbl v/s USD121.6 in 4QFY12 and USD110.2 in 3QFY13, and net realization at USD36.6/bbl v/s USD44.3/bbl in 4QFY12 and USD48/bbl in 3QFY13.

- Subsidy sharing assumption: For FY13E/14E/15E, we model upstream sharing at 40% (similar to FY11/12), and ONGC's share at ~81.8% of upstream. We expect ONGC to share INR156.5b (USD77/bbl) in 4QFY13E.

- Our brent price assumption is USD110/bbl for FY13E/14E/15E and at USD95/bbl for long term. We model upstream sharing at 40% in FY13E/14E/15E. The stock trades at 5.7x FY15E EPS of INR52.9. Buy.

Source : Equity Bulls

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