ONGC shares surge 2.4% on 17% Q2 profit boost
Shares of Oil and Natural Gas Corporation (ONGC) surged as much as 2.37% to ₹263 apiece on the BSE early today after the state-owned company reported a 17% increase in net profit for Q2 FY25.
At the time of reporting, ONGC shares were trading 1.52% higher at ₹260.80, with a market cap of ₹3,28,093.68 crore.
The oil company shares opened higher today at ₹262.55 against the previous close price of ₹256.90. Over the past month, the stock has dropped 8.95%, it dipped 2.27% in the last six months. On the year-to-date (YTD), the counter surged 27.03%.
ONGC reported a standalone net profit of ₹11,948.02 crore for the July-September 2024, marking an increase from ₹10,238.10 crore in the same quarter last year and ₹8,938.10 crore in the previous quarter.
The state-owned company’s revenue from operations dipped to ₹33,881 crore in Q2, down from ₹35,163.04 crore a year prior, but other income more than doubled to ₹4,765.64 crore. ONGC reported a net profit of ₹20,922.12 crore for the first half, close to ₹20,765 crore in the corresponding period of 2023. For the full fiscal year 2023-24, the company had achieved a net profit of ₹40,526 crore. The ONGC board announced a first interim dividend of ₹6 per share for FY25.
Its consolidated net profit for the quarter ending September 2024 declined by 38.9% to ₹9,878 crore from ₹16,171 crore in the same period the previous year.
The profit growth largely stemmed from lower windfall tax, as government levies dropped with oil prices stabilising. ONGC paid ₹7,829.51 crore in statutory levies for Q2, down from ₹10,791.09 crore a year ago and ₹9,771.95 crore in the previous quarter.
The government imposes a windfall profit tax on crude oil producers to capture unexpected gains when international prices surge. This tax is now nil in the current quarter.
The state-owned oil company earned $78.33 per barrel in July-September quarter, a drop from $84.84 per barrel a year earlier, while the gas price held steady at $6.5 per million British thermal units (mmbtu).
Focusing on bolstering domestic production, ONGC reversed the decline in crude output, with Q2 FY25 standalone crude production reaching 4.576 million tonnes (MMT)— a 0.7% increase from Q2 FY24. Similarly, crude production in H1 FY25 rose to 9.204 MMT, up 0.8% from H1 FY24.
On the gas production front, ONGC has been able to arrest the degrowth. The decline which was 3.6% in Q1 FY25 over Q 1 FY24 has been brought down to 2.1% in Q2 FY 25 over Q2 FY 24.
ONGC anticipates further crude oil production increases in the upcoming quarters as output ramps up from its Krishna Godavari basin block. “The three oil wells of A-field of deepwater block KG-DWN-98/2 were opened on 30th October 2024, thereby enhancing total oil production to about 25,000 BOPD from eight flowing wells of cluster-II. Remaining five oil wells are planned to be opened shortly,” it adds.