Oil and Natural Gas Corporation (ONGC) shares declined over a percent on Tuesday after the company missed revenue and profit estimates owing to lower volumes.

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The stock was trading 1.22 percent lower at Rs 137.55 per share on BSE at the time of writing. It has gained 8.74 percent in the last month while it has fallen 3.41 percent this year so far. In the past year, the stock has gained 19 percent, outperforming the Sensex by 11.36 percent.

ONGC on Friday reported its first-quarter earnings, with the revenue rising 84 percent on a year-on-year basis to Rs 42,320 crore from Rs 23,021.64 crore and the net profit jumping 251 percent to Rs 15,205.9 crore — its highest quarterly profit — from Rs 4,334.75 crore.

Its total income stood at Rs 43,078.39 crore in Q1 as compared to Rs 23,555.31 crore during the same period a year ago, while the operating margin came in at 49.57 percent as against 32.01 last year.

On a quarter-on-quarter basis, the revenue is up 22 percent while the net profit has increased 71.6 percent. The EBITDA or earnings before interest, taxes, depreciation, and amortization — a measure of the company's overall financial performance — is up 39 percent while the margin has improved to 61.3 percent from 53.9 percent.

While the margin is in line with CNBC-TV18's poll estimate of 53 percent, the EBITDA is above expectations. However, revenue and net profit were lower than the Street estimates.

Crude oil, as well as gas sales, stood flat on a year-on-year as well as quarter-on-quarter basis. Oil realisations stood at $108.5 a barrel, in line with the Street estimates.

Motilal Oswal has a 'buy' rating on the stock and sees a potential upside of 27 percent. However, it says the key risk will be a sharp decline in oil prices, which are at a six-month low, or continuation of windfall taxes.

This month, the government cut the windfall tax on diesel and aviation turbine fuel (ATF) but raised the duty on domestically produced crude oil. It revised the tax on crude oil from Rs 17,000 per tonne to Rs 17,750 per tonne, and the export duty on diesel from Rs 11 per litre to Rs 5 per litre and removed it on jet fuel and petrol.

In July, it imposed a tax of Rs 6 per litre on the export of petrol and aviation turbine fuel (ATF) and Rs 13 per litre on exporting diesel and announced an additional tax of Rs 23,250 per tonne on crude oil produced domestically.

First Published:Aug 16, 2022 11:41 AM IST