In its rating rationale, CARE said that the initial rating assigned to the proposed NCD and reaffirmation of the ratings assigned to the bank facilities/instruments of ONGC consider its majority ownership by the Government of India (GoI), experienced management and its strategic importance to the GoI as the company plays a key role in the energy security for the country.
CARE added that the ratings further derive comfort from ONGC’s dominant position and a long track record in the domestic exploration and production (E&P) industry and its experienced and professional management. Furthermore, the ratings also derive strength from its sound and resilient profitability margins backed by robust E&P infrastructure and proven technical capabilities with presence across the hydrocarbon value chain and its and comfortable financial risk profile marked by low gearing, healthy debt metrics and strong liquidity position.
However, CARE also said that the ratings remain susceptible to inherent risk related to E&P business, regulatory and geopolitical risk for overseas operations, and large CAPEX requirements to replace reserves.
On Sensex, ONGC closed at Rs115.25 per piece up by 0.44%.