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ONGC: Oil realisation at US$ 69.4/bbl

News: ONGC's revenue increased 5.8% QoQ to | 24353.6 crore in Q2FY22. Oil and gas production improved 1.4% QoQ and 3% QoQ, respectively. EBITDA was up 8.8% QoQ to | 13226.2 crore. DD&A expenses were at | 4641.8 crore. On account of write-back of deferred tax liability on switching to lower tax rate, the company reported negative tax outgo of | 7195.4 crore. Subsequently, PAT stood at | 18347.7 crore, up 323.3% QoQ.

Views: While profitability was above estimate, production performance was broadly in line with estimate. The movement in oil prices is important for ONGC's performance, going ahead. Oil prices seen trending upwards sequentially over last five quarters. Currently, Brent oil prices are trending in range of US$ 80-85/bbl. Also, domestic gas prices were increased in its semi-annual revision in October. Current oil & gas price trend auvurs well for ONGC. However, consistently low volume growth remains a key concern for the company and needs to be addressed in order to create value for shareholders.