Result Update

September 9, 2016
Rating matrix
Rating
Target
Target Period
Potential Upside

:
:
:
:

Oil & Natural Gas Corp (ONGC)

Hold
| 240
12 months
-6%

Lower opex spells some relief

Whats changed?
Target
EPS FY17E
EPS FY18E
Rating

Changed from | 215 to | 240

Changed from | 14.4 to | 18.7
Changed from | 15.3 to | 19.1
Unchanged

Quarterly performance
Revenue
EBITDA
EBITDA (%)
PAT

Q1FY17
17,784.8
9,390.5
52.8
4,232.5

Q1FY16
22,825.3
12,128.5
53.1
5,643.8

YoY (%)
-22.1
-22.6
-34 bps
-25.0

Q4FY16 QoQ (%)

16,384.8
8.5
6,212.1
51.2
37.9 1489 bps
4,416.1
-4.2

Key financials
| Crore
Revenues
EBITDA
Net Profit
EPS (|)

FY15
160,894.8
53,508.2
17,672.9
21.4

FY16E
131,517.3
47,376.2
14,300.9
16.5

FY17E
131,140.0
44,128.0
16,332.7
18.7

FY18E
126,069.5
45,308.9
16,861.9
19.1

FY16E
15.4
14.5
4.9
1.2
7.7
9.7

FY17E
13.7
12.9
5.9
1.1
8.5
9.2

FY18E
13.3
12.5
5.9
1.1
8.4
8.8

Valuation summary
P/E
Target P/E
EV/EBITDA
P/BV
RoNW (%)
RoCE (%)

FY15
11.9
11.2
4.5
1.2
9.8
10.5

| 255

Stock data
Particular
Market Capitalization (| Crore)
Total Debt (FY16) (| Crore)
Cash and Investments (FY16) (| Crore)
EV (| Crore)
52 week H/L
Equity capital (| Crore)
Face value (|)

Amount
218,166.8
53,592.6
38,240.6
233,518.8
267/188
4,277.8
5.0

Price performance
Return %

1M

3M

6M

12M

Cairn India

2.9

44.6

58.4

38.3

ONGC

5.6

13.2

18.9

5.8

Reliance Ind

0.4

6.8

1.3

22.0

Oil India

3.4

11.0

25.4

(11.1)

Research Analyst
Mayur Matani
mayur.matani@icicisecurities.com
Harshal Mehta
harshal.mehta@icicisecurities.com

ICICI Securities Ltd | Retail Equity Research

ONGC declared its Q1FY17 results, which were above our estimates
on the profitability front. The topline declined 22.1% YoY to
| 17784.8 crore and came in above our estimate of | 18296.3 crore.
The reported PAT declined 25% YoY to | 4232.5 crore and came in
above our estimate of | 3306.9 crore, mainly due to lower than
estimated operating expenses
The net realisation came in marginally higher at $46.1/bbl than
estimated $45.8/bbl. There was nil subsidy during the quarter
Net under-recovery to reduce to nil in FY18
A sharp decline in crude prices and the governments deregulation of
diesel prices has led to a decline in gross crude oil under-recoveries.
Also, the recent hike of 25 paise per month in the kerosene prices by the
GoI and the governments scheme of Direct Benefit Transfer (DBT) for
LPG cylinders is a step in the right direction for upstream PSUs. However,
subdued crude oil prices have led to negative impact on net realisations.
Assuming Brent crude oil prices stays at US$45/bbl, we expect gross
crude oil under-recoveries to decline from | 27570.2 crore in FY16 to
| 20261.4 crore in FY18E, whereas, the net subsidy share of ONGC to
decrease from | 1096.1 crore in FY16 to nil in FY18E assuming
governments last approved subsidy sharing mechanism for FY16.
Currently, we have modelled net realisation of US$ 45.3/bbl and US$
45/bbl for FY17E and FY18E, respectively.
Standalone profitability rises on back of higher margins
Crude oil production in Q1FY17 was 5.5 MMT for ONGC and 0.9 MMT for
PSC-JVs. Natural gas production came in at 5.2 bcm for ONGC and 0.3
BCM for PSC-JVs. The company expects some growth in domestic crude
oil production in the current year as ramp-up in production is seen from
the redevelopment projects in Mumbai High (North & South), associated
oil from Daman and Vasai (East). The incremental production from Daman
and Vasai (East) will add to incremental ONGCs domestic gas volumes.
On the profitability front, the company showed strong gains on the
backdrop of reduction in workover costs (~| 415 crore), water injection
costs (~228 crore) and lower than estimated cess rate (~16.7% vs.
estimated 20%).
Crude oil prices continue to remain overhang for stock
OVL reported a net loss of ~| 2094 crore in FY16 against PAT of ~| 1904
crore in FY16. OVLs profitability continues to be a cause of concern for
ONGC at lower crude oil prices. On the gas pricing front, as per the
formula set by the government the APM gas prices are scheduled to be
revised on October 1, 2016 and further lowering of the prices (~20%
estimate) from current $3.4/mmbtu levels (GCV) will pressurise the
companys operating performance. We assume government proposed
subsidy sharing mechanism in our estimates, where it decided to cap its
sharing of kerosene subsidy at | 12/litre and LPG at | 15/kg, with the rest
being borne by oil PSUs. We have assumed the above subsidy sharing
mechanism for the long term to arrive at a target price of | 240/share with
EPS of | 18.7 and | 19.1 for FY17E and FY18E, respectively assuming
Brent crude price at US$45/bbl. However, if Brent crude price increases to
US$ 50/bbl for the remaining period of FY17E and FY18E, ONGCs target
price would change to | 264/share. We have a HOLD rating on the stock
at the current levels.

Variance analysis
Q1FY17
17,784.8

Q1FY17E
18,296.3

Q1FY16
22,825.3

YoY (%)
-22.1

Q4FY16
16,384.8

QoQ (%)
8.5

Raw materials costs

Employees Cost

279.6
467.7

185.0
504.2

19.6
475.7

1,328.0
-1.7

466.3
421.2

-40.0
11.1

Other Expenses
Total Expenditure
EBITDA
EBITDA margins (%)

7,646.9
8,394.2
9,390.5
52.8

8,810.5
9,499.7
8,796.5
48.1

10,201.6
10,696.8
12,128.5
53.1

-25.0
-21.5
-22.6
-34 bps

9,285.2
10,172.7
6,212.1
37.9

-17.6
-17.5
51.2
1489 bps

Total Revenues

Depreciation
EBIT

3,699.7
5,690.8

4,599.9
4,196.7

4,580.7
7,547.8

-19.2
-24.6

4,101.9
2,110.2

-9.8
169.7

Interest
Other Income
Extra Ordinary Item
PBT
Total Tax
PAT

292.0
952.4
0.0
6,351.2
2,118.6
4,232.5

1.0
667.5
0.0
4,863.1
1,556.2
3,306.9

3.1
806.2
0.0
8,350.9
2,707.1
5,643.8

9,381.5
18.1
NA
-23.9
-21.7
-25.0

7.3
3,391.9
852.2
6,347.1
1,931.0
4,416.1

3,905.9
-71.9
NA
0.1
9.7
-4.2

67.1
4167.9
45.8
45.8
6.40
5.57

63.5
8743.5
63.8
58.9
6.5
5.8

5.7
-53.2
-27.7
-21.8
-2.1
-5.6

67.7
5485.8
34.9
34.9
6.3
5.2

-0.8
-25.3
32.2
32.2
0.0
4.8

Key Metrics
Exchange rate (|/$)
67.1
Under-recoveries (| cr)
4095.4
Gross realisation($/bbl)
46.1
Net realisation ($/bbl)
46.1
Oil Production (mmt)
6.34
Gas Production (mmt)
5.49
Source: Company, ICICIdirect.com Research

Comments
Lower than estimated due to fall in natural gas production

Lower than estimated workover costs, lower cess rate (16.7% vs

estimated 20%) mainly led to lower other expenses

Lower impairment wrt some exploratory wells and marginal fields,

reclassification of certain assets to other expenses led to lower than
estimated depreciation
Change in accounting standards to IND-AS led to higher than
estimated interest expense

Change in estimates
FY17E
FY18E
(| Crore)
Old
New % Change
Old
New % Change
Revenue
132,516.7 131,140.0
-1.0 127,494.6 126,069.5
-1.1
EBITDA
41,956.7 44,128.0
5.2 43,419.6 45,308.9
4.4
EBITDA Margin (%)
31.7
33.6
199 bps
34.1
35.9
188 bps
PAT
12,657.3 16,332.7
29.0 13,551.1 16,861.9
24.4
EPS (|)
14.4
18.7
29.9
15.3
19.1
25.3
Source: Company, ICICIdirect.com Research

Comments

PAT revised upwards due to lower opex estimates

Assumptions
Current
FY15
FY16
Exchange rate (|/$)
61.2
65.4
Under-recoveries (| cr)
76285.0 27570.2
Gross realisation($/bbl)
85.3
48.3
Net realisation ($/bbl)
44.9
47.1
Oil Prodn (Dom) (mmt)
25.9
25.9
Oil Prodn (OVL) (mmt)
5.5
5.5
Gas Prodn (Dom)(mmt)
23.5
22.5
Gas Prodn (OVL)(mmt)
3.3
3.4
Source: Company, ICICIdirect.com Research

FY17E
67.0
19287.6
45.3
45.3
25.7
6.6
23.5
3.3

Earlier
FY18E
67.0
20261.4
45.0
45.0
26.1
7.0
25.2
3.4

ICICI Securities Ltd | Retail Equity Research

FY17E
67.0
26963.5
44.8
44.1
26.1
5.7
25.0
3.6

FY18E
Comments
67.0
30,745.7 Estimates lowered due to a decline in LPG underecovery estimates
44.5
43.7 Assuming nil subsidy burden at for both FY17 and FY18, respectively
26.4
5.8 Estimates increased for oil production from Vankor field (Russia)
26.4
3.7

Page 2

Company Analysis
Net under-recovery to reduce to nil in FY18
Sharp decline in crude prices and the governments deregulation of diesel
prices has led to the decline in the gross crude oil under-recoveries. Also,
the recent hike of 25 paise per month in the kerosene prices by the GoI
and the governments scheme of Direct Benefit Transfer (DBT) for LPG
cylinders is a step in the right direction for upstream PSUs. However,
subdued crude oil prices have led to negative impact on net realisations.
Assuming Brent crude oil prices stays at US$ 45/bbl, we expect the gross
crude oil under-recoveries to decline from | 27570.2 crore in FY16 to
| 20261.4 crore in FY18E, whereas, the net subsidy share of ONGC to
decrease from | 1096.1 crore in FY16 to nil in FY18E assuming
governments last approved subsidy sharing mechanism for FY16.
Exhibit 1: Impact of gross under-recoveries on ONGC
200,000

125
161,029

120,000

100

139,869

138,541
103,292

75
78,193

80,000

US$ per barrel

| Crore

160,000

76,285

50

46,051
27,570

40,000

19,288

25

20,261

0
FY09

FY10

FY11

FY12

Gross under-recoveries (LHS)

FY13

FY14

FY15

ONGC Subsidy Burden (LHS)

FY16E

FY17E

Net Realisations (RHS)

FY18E
Gross Realisations (RHS)

Source: ICICIdirect.com Research

Exhibit 2: ONGCs subsidy sharing burden

60000

45000

75

67.7

60
56384.3

| Crore

40.4

45

30000
30

36299.6
15000

15
1.1

0
FY14E

FY15

FY16
1096.1

0.0
0.0
FY17E

0.0
0.0

FY18E

Source: Company, ICICIdirect.com Research

However, at the current moment, Brent crude oil prices will play a more
decisive role in determining the profitability of upstream companies than
the subsidy sharing mechanism. Currently, we have modelled net
realisation of US$ 45.3/bbl and US$ 45/bbl for FY17E and FY18E,
respectively.

ICICI Securities Ltd | Retail Equity Research

Page 3

Exhibit 3: ONGCs oil gross and net realisations

125

80

108.7

USD per barrel

100

60

85.3

75
50

40.9

44.9

48.3 47.1

45.3 45.3

40

45.0 45.0

20

25
0

0
FY14

Gross Realised Price

FY15

FY16

FY17E

Realised Price after Subsidy / Discount

FY18E
Subsidy / Discount (RHS)

Source: Company, ICICIdirect.com Research

Standalone profitability rises on back of higher margins

Crude oil production in Q1FY17 was 5.5 MMT for ONGC and 0.9 MMT for
PSC-JVs. Natural gas production came in at 5.2 bcm for ONGC and 0.3
BCM for PSC-JVs. The company expects some growth in domestic crude
oil production in the current year as ramp-up in production is seen from
the redevelopment projects in Mumbai High (North & South), associated
oil from Daman and Vasai (East). The incremental production from Daman
and Vasai (East) will add to incremental ONGCs domestic gas volumes.
On the profitability front, the company showed strong gains on the
backdrop of reduction in workover costs (~| 415 crore), water injection
costs (~228 crore) and lower than estimated cess rate (~16.7% vs.
estimated 20%).
Exhibit 4: ONGC oil and gas production

mmtoe

75
3.0
1.6

2.7
1.7

3.4
1.7

3.4
1.7

26.3

26.9

26.9

60

2.9
1.6

45

23.3

24.6

30

5.5
3.7

5.7
3.9

6.3
4.1

6.6
4.2

6.6
4.2

22.2

23.6

25.2

25.8

25.8

FY14

FY15

FY16

FY17E

FY18E

15
0

ONGC (oil)

JV (oil)

OVL (oil)

ONGC (gas)

JV (gas)

OVL (gas)

Source: Company, ICICIdirect.com Research

ICICI Securities Ltd | Retail Equity Research

Page 4

SC verdict poses risk

Gujarat High Court, in its recent order, had directed ONGC to pay royalty
to the Gujarat government for crude oil produced in the state on the basis
of pre-discount price, instead of post subsidy discount price to OMCs, as
is the case currently. The Supreme Court, in an interim verdict, has
ordered ONGC not to pay retrospectively but pay royalty on the market
price from February 2014 onwards. ONGCs earnings would be impacted
if royalty on market price is imposed only for production from onshore
blocks.
Exhibit 5: Trend in consolidated net profits
50000

| Crore

40000
30000

26653.0

17672.9
14300.9

20000

16332.7

16861.9

10000
0
FY14

FY15

FY16

FY17E

FY18E

Source: Company, ICICIdirect.com Research

ICICI Securities Ltd | Retail Equity Research

Page 5

Outlook & Valuation

OVL reported net loss of ~| 2094 crore in FY16 against PAT of ~| 1904
crore in FY16. OVLs profitability continues to be a cause of concern for
ONGC at lower crude oil prices. On the gas pricing front, as per the
formula set by the government the APM gas prices are scheduled to be
revised on October 1, 2016 and further lowering of the prices (~20%
estimate) from current $3.4/mmbtu levels (GCV) will pressurise the
companys operating performance. We assume government proposed
subsidy sharing mechanism in our estimates, where it decided to cap its
sharing of kerosene subsidy at | 12/litre and LPG at | 15/kg, with the rest
being borne by oil PSUs. We have assumed the above subsidy sharing
mechanism for the long term to arrive at a target price of | 240/share with
EPS of | 18.7 and | 19.1 for FY17E and FY18E, respectively, assuming
Brent crude price at US$45/bbl. However, if Brent crude price increases to
US$50/bbl for the remaining period of FY17E and FY18E, ONGCs target
price would change to | 264/share. We have a HOLD rating on the stock
at the current levels.
Exhibit 6: Valuation
Valuation based on P / BV multiple
Adjusted Book Value for FY18E (|Crore)
Adjusted number of shares (Crore)
Adjusted Book Value per share (|)
Multiple
Value of core business (| per share)
Add: Listed investments (25% discount to CMP) (| per share)
Fair Value per share (|)

195305.3
855.6
228.3
1.1
248.8
16
264

Valuation based on P / E multiple

Profit after tax for FY18E (| Crore)
Less: Other Income adjusted for tax (| Crore)
Adjusted profit after tax for FY18E (| Crore)
Number of shares (Crore)
Adjusted EPS for FY18E (|)
Multiple
Fair value per share without investments (|)
Add: Value of Investments (| per share)
Listed investments (25% discount to CMP)
Other Investments
Fair value per share (|)

16861.9
2626.4
14235.5
855.6
16.6
12.0
199.0
16
1.8
216

Weighted Target Price (| per share)

240

Source: ICICIdirect.com Research

Exhibit 7: Valuations
Year
FY15
FY16
FY17E
FY18E

Sales
(| Crore)
160894.8
131517.3
131140.0
126069.5

Sales Gr.
(%)
91.8
-18.3
-0.3
-3.9

EPS
(|)
21.4
16.5
18.7
19.1

EPS Gr.
(%)
-17.0
-23.0
13.1
2.5

PE
(x) EV/EBITDA (x)
11.9
4.5
15.4
4.9
13.7
5.9
13.3
5.9

RoNW
(%) RoCE (%)
9.8
10.5
7.7
9.7
8.5
9.2
8.4
8.8

Source: Company, ICICIdirect.com Research

ICICI Securities Ltd | Retail Equity Research

Page 6

600

100.0

500

80.0

400

60.0

300

40.0

200

20.0

(%)

(|)

Recommendation history vs. consensus estimate

100

0.0
Aug-14

Nov-14

Jan-15

Apr-15

Price

Jun-15

Aug-15

Idirect target

Nov-15

Jan-16

Apr-16

Consensus Target Mean

Jun-16

Sep-16

% Consensus with BUY

Source: Bloomberg, Company, ICICIdirect.com Research

Key events
Date
Jun-09
May-10
Jun-11
May-12
Jan-13
Jan-13
Jun-13
Aug-13
Oct-14
Oct-14
Dec-14

Event
Subsidy burden for Q4FY09 was fixed lower at US$4.5/bbl against the last three quarters of FY09
Administered priced mechanism (APM) gas prices were hiked from US$1.8/mmbtu to US$4.2/mmbtu
Government of India announces increase in petroleum product prices, eliminates custom duty on crude oil and reduces excise duties on petrol & diesel
Petrol prices increased sharply by | 7.5-8 per litre
The Rangarajan committee submitted its report to the Prime Ministers Office (PMO) on fiscal terms under the PSC, gas pricing, contract management and audit,
which, if implemented, would be positive for the sector. The gas pricing formula suggested was positive for oil upstream companies
The government took a brave and bold decision and asked oil marketing companies (OMCs) to periodically hike diesel prices by 50 paise/month
Government of India announces increase in gas prices based on the Rangarajan committee with some riders
Government of India fixes subsidy sharing for FY14 at US$56/bbl
Government announces diesel deregulation
Government announces gas pricing policy
Crude oil prices decline by nearly 50% from the 2014 high's

Source: Company, ICICIdirect.com Research

Top 10 Shareholders
Rank
1
2
3
4
5
6
7
8
9
10

Name
Government of India
Life Insurance Corporation of India
Indian Oil Corpn Ltd
GAIL (India) Ltd
The Vanguard Group, Inc.
Templeton Asset Management Ltd.
ICICI Prudential Asset Management Co. Ltd.
Norges Bank Investment Management (NBIM)
Goldman Sachs Asset Management (India) Private Ltd.
BlackRock Institutional Trust Company, N.A.

Shareholding Pattern
Latest Filing Date % O/S Position (m) Change (m)
31-Mar-16 68.9
5897.7
0.0
31/Mar/16
8.7
741.0
41.4
31-Mar-16
7.7
657.9
0.0
31/Mar/16
2.4
205.6
0.0
30-Apr-16
0.7
56.2
0.2
31/Mar/16
0.6
54.6
0.3
31-Mar-16
0.5
39.7
-7.7
31/Dec/15
0.3
24.8
4.9
30-Apr-16
0.3
23.0
-0.1
30/Apr/16
0.3
22.3
0.2

(in %)
Promoter
FII
DII
Others

Jun-15 Sep-15 Dec-15 Mar-16 Jun-16

68.9
68.9
68.9
68.9
68.9
7.2
6.4
6.0
5.6
5.5
10.4
11.1
11.5
11.9
11.9
13.4
13.6
13.6
13.6
13.7

Source: Reuters, ICICIdirect.com Research

Recent Activity
Investor name
Investor name
Life Insurance Corporation of India
Norges Bank Investment Management (NBIM)
PGGM Vermogensbeheer B.V.
State Street Global Advisors (US)
Eastspring Investments (Singapore) Limited
Source: Reuters, ICICIdirect.com Research

ICICI Securities Ltd | Retail Equity Research

Value
133.83
17.97
7.92
4.38
4.01

Shares
41.41
4.92
2.17
1.35
1.10

Investor name
Investor name
ICICI Prudential Asset Management Co. Ltd.
APG Asset Management
Investec Asset Management Ltd.
JM Financial Asset Management Pvt. Ltd.
FIL Investment Management (Hong Kong) Limited

Value
-24.90
-11.47
-6.13
-6.21
-4.09

Shares
-7.70
-3.14
-2.15
-1.92
-1.16

Page 7

Financial summary
Profit and loss statement
(Year-end March)
Revenue
Growth (%)
(Inc.)/Dec. in stock trade
Raw material Costs
Employee Costs
Statutory Levies
Other Expenditure
Op. Expenditure
EBITDA
Growth (%)
Depreciation
EBIT
Interest
Other Income
PBT
Growth (%)
Tax
Reported PAT
Growth (%)
EPS

| Crore
FY15
160,894.8
-7.2
1722.9
57637.7
2404.3
25502.4
20119.3
107386.6
53,508.2
-8.1
29203.5
24304.7
2923.2
5988.8
27370.3
-30.6
9697.4
17,672.9
-33.7
21.4

FY16
131,517.3
-14.3
722.9
35877.4
2712.8
21620.1
23208.0
84141.2
47,376.2
-11.5
24158.6
23217.6
2157.3
7847.0
22717.9
-17.0
8417.0
14,300.9
-19.1
16.5

FY17E
131,140.0
-6.0
-4.3
45572.7
3775.9
19873.8
17793.9
87012.0
44,128.0
-6.9
21160.7
22967.3
4294.6
5291.6
23964.3
5.5
7631.6
16,332.7
14.2
18.7

FY18E
126,069.5
-4.2
0.0
39348.9
3889.7
19713.0
17809.0
80760.6
45,308.9
2.7
21914.1
23394.8
4041.5
5340.0
24693.3
3.0
7831.4
16,861.9
3.2
19.1

Cash flow statement

(Year-end March)
Profit after Tax
Less: Dividend Paid
Add: Depreciation
Add: Others
Cash Profit
Increase/(Decrease) in CL
(Increase)/Decrease in CA
CF from Operating Activities
Purchase of Fixed Assets
(Inc)/Dec in Investments
Others
CF from Investing Activities
Inc/(Dec) in Loan Funds
Inc/(Dec) in Sh. Cap. & Res.
Others
CF from financing activities
Change in cash Eq.
Op. Cash and cash Eq.
Cl. Cash and cash Eq.

| Crore
FY15
17,672.9
9,489.1
29,203.5
0.0
37,260.8
-2,088.4
-3,807.7
31364.7
44,587.5
-3.2
0.0
-44,590.8
6,283.2
119.1
0.0
6,402.3
-6,823.8
36,563.1
29,739.3

FY16
14,300.9
8,756.6
24,158.6
0.0
31,915.8
7,879.9
7,261.6
47057.3
34,989.8
-4,033.1
0.0
-39,022.9
1,721.3
-1,254.4
0.0
466.9
8,501.3
29,739.3
38,240.6

FY17E
16,332.7
8,989.7
21,160.7
0.0
31,176.2
7,548.6
-1,859.9
36864.8
58,135.8
-4,780.0
0.0
-62,915.8
4,977.7
-107.9
0.0
4,869.8
-21,181.2
38,240.6
17,059.4

FY18E
16,861.9
8,989.7
21,914.1
0.0
31,488.3
-3,790.3
6,172.7
33870.6
42,826.9
0.0
0.0
-42,826.9
6,250.0
-258.4
0.0
5,991.6
-2,964.7
17,059.4
14,094.7

FY15

FY16

FY17E

FY18E

210.9
34.8
21.4
55.6
9.5

215.9
44.7
16.5
44.7
8.5

224.4
19.9
18.7
43.4
9.0

233.3
16.5
19.1
44.8
9.0

33.3
11.0
0.7
46.7
82.8
216.2

36.0
10.9
0.5
47.0
45.1
235.5

33.6
12.5
0.5
53.4
48.0
286.1

35.9
13.4
0.4
49.9
49.1
265.4

9.8
10.5
12.0

7.7
9.7
11.6

8.5
9.2
9.8

8.4
8.8
0.0

11.9
1.2
4.5
1.5

15.4
1.2
4.9
1.8

13.7
1.1
5.9
2.0

13.3
1.1
5.9
2.1

0.3
8.3
1.0
1.1
0.9

0.3
10.8
1.1
1.0
0.9

0.3
5.3
1.3
0.7
0.6

0.3
5.8
1.4
0.6
0.5

Source: Company, ICICIdirect.com Research

Source: Company, ICICIdirect.com Research

Balance sheet

| Crore

(Year-end March)
Source of Funds
Equity Capital
Reserves & Surplus
Shareholder's Fund
Loan Funds
Abandon cost liability
Deferred Tax Liability
Minority Interest
Source of Funds

FY15

FY16

FY17E

FY18E

4,277.8
176,176.6
180,454.4
51,871.3
0.0
18,175.9
2,473.1
252,974.7

4,277.8
180,466.6
184,744.3
53,592.6
0.0
20,355.3
2,506.7
261,198.9

4,277.8
187,701.7
191,979.4
58,570.3
0.0
23,482.8
2,051.6
276,084.2

4,277.8
195,315.4
199,593.2
64,820.3
0.0
25,184.8
2,051.6
291,649.9

Application of Funds
Net Block
Capital WIP
Producing Properties
Pre-Producing Properties
Total Fixed Assets
Investments
Inventories
Debtor
Cash
Loan & Advance, Other CA
Total Current assets
Current Liabilities
Provisions
Total CL and Provisions
Net Working Capital
Miscellaneous expense
Application of Funds

88,928.0
42,211.5
91,004.9
21,196.7
243,341.1
4,749.1
10,606.2
18,797.0
29,739.3
29,364.4
88,507.0
49,083.7
34,538.8
83,622.5
4,884.5
0.0
252,974.8

54,918.8
32,508.1
130,658.6
36,086.9
254,172.4
8,782.2
10,089.7
9,686.5
38,240.6
31,729.9
89,746.7
50,565.5
40,936.9
91,502.4
-1,755.7
0.0
261,198.9

84,889.4
48,390.0
127,047.3
30,820.8
291,147.4
13,562.3
10,365.5
9,327.1
17,059.4
33,673.4
70,425.4
55,560.7
43,490.3
99,050.9
-28,625.5
0.0
276,084.2

96,274.6
46,573.0
134,773.2
34,439.5
312,060.2
13,562.3
9,747.5
9,597.4
14,094.7
27,848.4
61,288.1
51,833.8
43,426.8
95,260.6
-33,972.5
0.0
291,650.0

Key ratios
(Year-end March)
Per share data (|)
Book Value
Cash per share
EPS
Cash EPS
DPS
Profitability & Operating Ratios
EBITDA Margin (%)
PAT Margin (%)
Fixed Asset Turnover (x)
Inventory Turnover (Days)
Debtor (Days)
Current Liabilities (Days)
Return Ratios (%)
RoE
RoCE
RoIC
Valuation Ratios (x)
PE
Price to Book Value
EV/EBITDA
EV/Sales
Leverage & Solvency Ratios
Debt to equity (x)
Interest Coverage (x)
Debt to EBITDA (x)
Current Ratio
Quick ratio

Source: Company, ICICIdirect.com Research

Source: Company, ICICIdirect.com Research

ICICI Securities Ltd | Retail Equity Research

Page 8

ICICIdirect.com coverage universe (Oil & Gas)

CMP
(|) TP(|) Rating
Sector / Company
592 665
Buy
Bharat Petroleum (BHAPET)
197 209 Hold
Cairn India (CAIIND)
473 500
Buy
Castrol India (CASIND)
396 475
Buy
GAIL (India) (GAIL)
633 545 Hold
Gujarat Gas (GUJGAS)
Gujarat State Petronet (GSPL)
157 152
Buy
Gulf Oil Lubricants (GULO)
740 670 Hold
Hindustan Petroleum (HINPET) 1,256 1,205 Hold
Indian Oil Corporation (INDOIL)
567 670
Buy
Indraprastha Gas (INDGAS)
770 870
Buy
Mangalore Refinery (MRPL)
85 105
Buy
246 240 Hold
ONGC (ONGC)
352 400
Buy
Petronet LNG (PETLNG)
Source: Company, ICICIdirect.com Research

M Cap
EPS (|)
P/E (x)
EV/EBITDA (x)
RoCE (%)
RoE (%)
(| Cr) FY15 FY16E FY17E FY15 FY16E FY17E FY15 FY16E FY17E FY15 FY16E FY17E FY15 FY16E FY17E
42,806 17.6 25.7 25.9 20.9 16.7 11.4 13.0 11.7
9.0 14.9 16.5 21.6 21.4 23.2 27.9
37,364 23.9 -50.3
5.6
3.0
8.2 -3.9
2.6
4.2 10.3 19.8 10.1
0.5 21.6
7.6 -19.3
24,728
9.6 12.4 14.2 49.3 38.0 32.9 31.6 25.0 21.2 137.0 148.7 157.8 95.5 106.9 109.5
50,232 34.5 24.0 18.1 11.5 16.8 22.2
9.0 12.7 13.4 15.1
9.6
7.6 16.2 10.4
7.5
8,715
2.1 32.2 13.0 306.5 19.6 48.3 20.9 10.6 15.0
5.7 16.6 10.8
1.7 22.3
8.5
8,844
7.9
9.7 11.1 19.8 16.0 14.1 11.4
9.2
8.2 13.5 16.0 17.1 11.1 12.4 12.8
3,668
NA 15.6 20.2
NA 47.4 36.6
NA 28.6 22.8
NA 30.9 34.6
NA 41.4 40.4
42,580 51.1 80.6 113.9 24.6 15.5 11.0 15.3 11.1
8.1
5.8 10.2 13.2 11.5 17.1 21.0
137,665 28.9 21.7 42.8 19.6 26.1 13.2
8.7 13.6
6.9
6.3
4.6 12.0 10.6
7.8 14.1
10,780 25.7 31.3 29.7 30.4 25.1 25.9 14.1 13.7 13.6 27.0 28.7 25.4 20.4 20.9 17.2
14,898
3.4
-9.8
6.6 23.6 -8.3 13.0 12.2 -6.2
4.8
2.0 -17.9
7.4
8.5 -32.3 17.9
218,167 31.0 21.4 16.5
8.2 11.9 15.4
3.9
4.5
4.9 15.2 10.5
9.7 15.5
9.8
7.7
26,400
9.5 11.8 12.2 36.9 29.7 28.9 18.8 19.8 16.4 14.5 13.5 14.5 14.3 15.5 14.3

ICICI Securities Ltd | Retail Equity Research

Page 9

RATING RATIONALE

ICICIdirect.com endeavours to provide objective opinions and recommendations. ICICIdirect.com assigns

ratings to its stocks according to their notional target price vs. current market price and then categorises them
as Strong Buy, Buy, Hold and Sell. The performance horizon is two years unless specified and the notional
target price is defined as the analysts' valuation for a stock.
Strong Buy: >15%/20% for large caps/midcaps, respectively, with high conviction;
Buy: >10%/15% for large caps/midcaps, respectively;
Hold: Up to +/-10%;
Sell: -10% or more;

Pankaj Pandey

Head Research

pankaj.pandey@icicisecurities.com

ICICIdirect.com Research Desk,

ICICI Securities Limited,
1st Floor, Akruti Trade Centre,
Road No 7, MIDC,
Andheri (East)
Mumbai 400 093
research@icicidirect.com

ICICI Securities Ltd | Retail Equity Research

Page 10

Disclaimer
ANALYST CERTIFICATION

We /I, Mayur Matani, MBA and Harshal Mehta, MTech research analysts, authors and the names subscribed to this report, hereby certify that all of the views expressed in this research report accurately
reflect our views about the subject issuer(s) or securities. We also certify that no part of our compensation was, is, or will be directly or indirectly related to the specific recommendation(s) or view(s) in this
report.

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ICICI Securities Ltd | Retail Equity Research

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