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ONGC slips up to 4% soon after reporting a initial-ever loss in March quarter

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Shares of Oil and Natural Fuel Company (ONGC) slipped as significantly as 3.93 per cent to Rs 78.20 apiece on the BSE on Wednesday, a day immediately after the condition-run oil and gas company posted a pre-tax loss of Rs 10,529 crore in the fourth quarter of the economical 12 months 2019-20 (Q4FY20). The loss was owing to a fall in crude oil rates, the effect of the Covid-19-induced lockdown, and exchange losses. It was ONGC’s 1st-at any time quarterly loss.&#13
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At 09:29 am, the stock was investing 1.6 for each cent lower at Rs 80.10 on the BSE. In comparison, the S&P BSE Sensex was quoting .5 for each cent increased at 35,099 stages.&#13
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ONGC had logged a profit just before tax (PBT) of Rs 11,691 crore in the corresponding interval of FY19. The company’s revenue from operations declined by 7 for every cent to Rs 104,489 crore in the period underneath evaluation, as opposed to Rs 112,539 crore the former year. Simply click Here TO Go through Total REPORT&#13
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All through the quarter under evaluate, the company’s web realisation on crude was noticed $49.01 a barrel, as versus $61.93 a barrel a 12 months ago. Gasoline price for the quarter was also reduce at $3.23 for each million metric British thermal unit (mmBtu), as opposed to $3.36 a mmBtu in the year-in the past interval.&#13
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Analysts at Motilal Oswal Financial Products and services (MOFSL), in an earnings review report, note that world-wide lockdowns on account of Covid-19 led to substantial demand destruction, which noticed crude oil rates sink to historic lows. With the lifting of the lockdowns throughout the globe, demand is all over again observing an uptick. On the supply side, production cuts, the two intentional (OPEC++) and unintended (thanks to inadequate economies/bankruptcies) show up to be placing upward force on oil prices, they wrote.&#13
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“ONGC is anticipated to improve its fuel production by just about 12 per cent / 26 for each cent to 27.9bcm/35.2bcm in FY21/FY22E. Whilst no oil production advancement is envisioned, ONGC’s initiatives to arrest decline from age-previous fields (accounting for 60–70 for every cent of the full oil production) is commendable,” the brokerage explained. It has taken care of a “Buy” rating on the inventory with the goal price of Rs 105.&#13
“With oil out of the woods, we revert to discounted cash flow DCF-based fair value of ONGC’s oil & fuel reserves from 10x FY21E earnings per share (EPS) before. Our DCF-based mostly valuation, assuming Brent at US$40/bbl in FY21E, US$45/bbl in FY22E&#13
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and prolonged-term Brent at US$50/bbl, performs out to Rs124/share (52% upside),” suggests ICICI Securities.&#13
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It additional suggests that underneath the prevailing gasoline pricing components (linked to fuel selling prices in 4 nations around the world of which 3 are net exporters), gasoline price ranges would be approximately US$2.2/mmbtu in FY21E. Deregulation of gas charges could make improvements to investor sentiment in ONGC and strengthen its fuel costs progressively to US$4/mmbtu or higher. The new start off of the fuel investing exchange and the oil minister’s remarks at the start of the trade is also anticipated to help the business.&#13
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Aside from, a rise in oil price ranges would also be a share price driver, it suggests in its rating rationale. The brokerage has upgraded the stock to ‘Buy’ from ‘Hold’ with the goal price of Rs 124.&#13
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