Oil and Natural Gas Corporation (ONGC), one of the leading Public sector oil companies of India was incorporated by the Indian Government in the year 1993. Till 1955, only two oil companies namely Assam Oil Company and Attock Oil Company had dominated the India’s oil and gas market. Then in 1956, Indian government formed Oil and Natural Gas Commission to promote, organize and implement programs for the production, sales and marketing of petroleum products in India. The commission initiated many measures and discovered new oil fields in the northeastern India. During the 1970’s the commission explored offshore regions and discovered many gas and oil fields including Mumbai High in the Western part of the country. In 1991 as the Indian government liberalized economic policies and it disinvested its investments partially in all Public sector undertakings, the commission initiated in 1956 was incorporated as Oil and Natural Gas Corporation in 1993. In 1999 as the result of a policy agreed between three major oil companies ONGC, IOC and GAIL Indian government sold 10% of its stake to IOC and 2.5% of to GAIL. The company does a wide range of activities and it includes exploration of oil & gas fields in India and offshore, and production of miscellaneous petrochemical products including Hydrocarbons. The company accounts for 77% of total oil production in India and 81% of India’s Natural gas production. The company owns and operates more than 11,000 kms of pipelines in India and it includes 3,200kms of Sub sea pipelines. The company has two subsidiaries namely, ONGC Videsh Limited and Mangalore Refinery and Petrochemical Limited (MRPL). ONGC is a fortune 500 company, being ranked 335^th in the list.

RECENT DEVELOPMENTS

• ONGC recently opened India’s first helium extraction plant in a joint venture with Saha Institute of Nuclear Physics (SINP). The unit is located at Kuthalam, a small town in the Cauvery river bed of Nagapattinam District of Tamilnadu.
• The company recently entered in to a pact with Calcutta Compressor and Liquefaction Ltd (CC&L) for the supply of gas from Coal-Bed Methane (CBM) in Jharkand.
•  The company in the month of April Buyback 30% stake in the Cambay basin block from Cairn India for Rs.5 crore.
• ONGC bagged 20 Oil and gas blocks, offered by the Government in the NELP-VII auction held in first week of this month. ONGC remains top in grabbing the oil fields.

FINANCIALS

The company last month announced the results of its final quarter. The net profit slipped by 2.05% and stood at Rs.26265.5 Million when compared to the net profit of Rs.  26816.4 Million posted in the corresponding quarter last year, a deficit of about Rs.550.9 Million. The Net profit lowered because of the increase in the operating costs and high depreciation. Company's net sales for this quarter rose by 26% as against the same period last year. Operating profit Margin lowered by 30% when compared with last quarter because of the salary hike.

The company’s Q4 performance compared with other market peers is tabulated below

The company with a better performance compared with its peers tops the table. Other Public Sector Oil companies posted lower net profits. It is obvious that the reason behind this downtrend of oil market is due to the soaring Crude Oil prices. The company in the past fiscal made 11 oil field discoveries and it is expected to do more in this fiscal. The company’s acquisition of right to explore 20 oil fields in the NELP-VII auction will aid the company to post good results in the upcoming quarters.

STOCK OUTLOOK

The stock is now trading at the level of Rs. 850-900. The Short term support level of the stock is at Rs. 790 and resistance level is at Rs. 1000. So the short term investors can accumulate the stock at this level with a stop at Rs. 790. However, investors need to be wary of impending war on Iran by Israel which is expected to affect the oil prices.