IIFL Institutional Equities, a part of the IIFL Group, one of the leading players in the Indian financial services space, recommends ‘‘Add’ on ONGC
The company’s 3QFY12 Ebitda came in 4% ahead of estimates. However, PAT was 5% below estimate on higher tax rate. ONGC accounted for extraordinary gains of Rs31.4bn relating to royalties borne on Cairn India’s behalf until 2QFY12, according to IIFL report.
IIFL said, “We expect ONGC to bear Rs185bn of under-recoveries for 4QFY12. We believe continued uncertainty on the final formula for subsidy sharing and on the possible share sale by government via the auction route would keep the stock price range bound”.
Domestic crude production declined 1.4% QoQ and gas production was flat QoQ. OVL’s production suffered due to: 1) ongoing conflict in Sudan (down 70kbpd from peak); and 2) sanctions imposed by the US and EU on Syria (down to zero), IIFL added.
The report was published by IIFL’s Institutional Equities Research desk.