Indiabulls recommends ‘hold’ on ONGC
Indiabulls has recommended a ‘hold’ rating on ONGC. During Q2 FY09, the company’s standalone net sales increased 12.9% y-o-y to Rs 17,410 crore.
RESEARCH: INDIABULLS
RATING: HOLD
CMP: Rs 655
Indiabulls has recommended a ���hold��� rating on ONGC. During Q2 FY09, the company���s standalone net sales increased 12.9% y-o-y to Rs 17,410 crore.
While the surge in global crude oil prices and the weakening rupee were expected to drive ONGC���s financials, its performance was dented by the excessive subsidy burden (Rs 12,670 crore) it had to shoulder in order to limit the losses of OMCs. As a result, ONGC���s standalone adjusted net profit declined 5.7% y-o-y to Rs 4,810 crore.
Due to the global economic crisis, oil prices have fallen by more than 60% from their peak of $147/bbl in mid-July to the current lows of $50/bbl. This is mainly due to dampening fuel demand from the major consuming nations. The IEA has lowered its oil demand forecasts by 500,000 bopd for the second half of ���08 and by 400,000 bopd for ���09.
Thus, with reducing demand, Indiabulls expects oil prices to be under pressure till FY10, thereby adversely affecting the company���s net realisations . However, Indiabulls believes that once the global economy revives , demand for crude oil and natural gas will recover, mainly due to increased demand from developing economies such as India and China.
RATING: HOLD
CMP: Rs 655
Indiabulls has recommended a ���hold��� rating on ONGC. During Q2 FY09, the company���s standalone net sales increased 12.9% y-o-y to Rs 17,410 crore.
While the surge in global crude oil prices and the weakening rupee were expected to drive ONGC���s financials, its performance was dented by the excessive subsidy burden (Rs 12,670 crore) it had to shoulder in order to limit the losses of OMCs. As a result, ONGC���s standalone adjusted net profit declined 5.7% y-o-y to Rs 4,810 crore.
Due to the global economic crisis, oil prices have fallen by more than 60% from their peak of $147/bbl in mid-July to the current lows of $50/bbl. This is mainly due to dampening fuel demand from the major consuming nations. The IEA has lowered its oil demand forecasts by 500,000 bopd for the second half of ���08 and by 400,000 bopd for ���09.
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Thus, with reducing demand, Indiabulls expects oil prices to be under pressure till FY10, thereby adversely affecting the company���s net realisations . However, Indiabulls believes that once the global economy revives , demand for crude oil and natural gas will recover, mainly due to increased demand from developing economies such as India and China.
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