ONGC to pay bonus as Q1 net rises 24%

NEW DELHI: ONGC shareholders have reason to cheer. The petro biggie, which posted over 24% growth in net profit in Q1 ’05-06 has decided to issue bonus shares in the ratio of 1:2.

This would mean one bonus share for every two shares held. The bonus issue, which comes after a gap of 11 years in the company, would come as a bonanza for shareholders of ONGC, which is riding high on sustained hike in global crude oil prices.

The company has posted record earnings and profits over the last few years despite shelling out huge subsidies for the downstream companies as part of the subsidy sharing formula. ONGC shares moved up around 4% at the bourses today.

Speaking to ET, ONGC CMD R S Sharma said that the company decided to declare a bonus issue in view of the huge capital accumulation. “ONGC’s equity base stands at 1426 crore where as its capital reserves are a whopping Rs 52,000 crore. This means that a share of Rs 10 face value has a book value of Rs 376 ie 37.6 times. This is more of a correction that was long due.”

The bonus issue is expected to also come as good news to the government as well as it would reap higher dividends for it. “The bonus issue would increase liquidity of the ONGC shares, make it more accessible for retail investors and finally improve the market cap of the company, “ Mr Sharma said.

ONGC has posted a 24.10% increase in net profit after tax at Rs 4,118.99 crore for the quarter ended June 30, as compared to Rs 3,318.88 crore for the corresponding quarter in 2005-06.

The average crude realisation post discounts stood at $ 45 a barrel as opposed to an average of $ 42.5 a barrel last fiscal. The average price of crude was ruling at around $ 72.5 a barrel Q1.

The total income (net of excise) rose to Rs 15,022.72 crore for the first quarter in 2006-07, up 34.51% from Rs 11,168.31 crore in the first quarter in 2005-06, the company informed the Bombay Stock Exchange. ONGC Videsh has made several significant overseas hydrocarbon forays during this quarter.