The Hindu Business Line : ONGC slips 3 positions in PFC Energy list

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New Delhi Feb. 2 ONGC's ranking in the 2006 PFC Energy 50 list has slipped three positions. Rallying against a combined 30 per cent market cap growth in global oil and gas industry and battling subsidy pressures on home turf, ONGC — with a 13 per cent growth in market cap in 2006 — managed the 21st rank in the list, down from the 18th rank it enjoyed a year ago.

However, the average ONGC market cap (2006) of $42 billion considered by PFC Energy 50 is 13 per cent higher than that of 2005, a senior company executive said. The combined market capitalisation of the PFC Energy 50 increased by nearly 30 per cent in 2006 to over $3.2 trillion. The list includes companies from 18 countries, led by the US (14 companies), European Union (13), Canada (7) and Russia (5).

PFC Energy 50 ranks the top 50 publicly traded companies in the oil and gas industry, based on yearend market capitalisation. PFC is an energy consulting firm specialising in the financial, strategic, commercial, political aspects of the international oil, gas and power industry. Combining a detailed knowledge and understanding of markets, countries and competition, PFC Energy is recognised for the depth of its analysis and ranking.

Elevation of companies in the emerging markets in the east vis-à-vis their western counterparts, is noticeable in the recently published list, a senior company executive said. Russian company Gazprom has climbed to the second slot (from fourth in 2005) with a 70 per cent gain in market cap, followed by Petrochina in third position (sixth in 2005) logging a 73 per cent gain. ExxonMobil (USA) maintained its commanding lead (36 per cent increase).

Before the thin respite in the third quarter subsidy which, in any case, got factored only in 2007 share price gains, ONGC's earnings from higher crude prices was `hedged' (neutralised) by the strong subsidy factor, the executive told Business Line. For the first half (H1) of the financial year 2007, the subsidy figure peaked to Rs 10,152 crore, double the H1 FY 2006 figure, reining the potentially-buoyant earning-per-share (EPS) of ONGC down to Rs 58.16 on the pre-bonus equity base, he said.

A weak greenback also depressed ONGC's earnings in 2006, as ONGC's realisations are on dollar-parity, he explained, adding that the stock is currently trading at a P/E of 10.1 on FY-07 annualised earnings, with analysts optimistic of a substantial upside.

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