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Arihant Capital
ONGC (Hold)
CMP: ₹275.80
Target: ₹297
ONGC’s 3QFY14 results came above estimates on lower operating expenses and write-backs. ONGC’s reported revenues declined by 1.1 per cent y-o-y to ₹2,0852 crore. Revenues include ₹3,018 crore of write-backs that pertains to deductions from payments towards Octroi/VAT/CST on discount allowed by the company to refiners. ONGC is confident of achieving incremental volumes through commissioning of marginal oilfields. Company has made four discoveries during the quarter of which 3 are on-land and one is offshore. Of these four discoveries two are in West Coast and two are in East Coast. ONGC’s volumes more or less have been stagnant in recent times. We believe unless incremental production starts flowing in from various clusters of marginal oilfields, stock is unlikely to see significant re-ratting.
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