Oil & Natural Gas

Corporation Ltd
Financial Statement Analysis

Presented By-
Isha Khuteta
A015
About the Company
 ONGC is the second largest oil and gas exploration and production
Company in the world and ranks 23rd among the leading global
energy majors.
 Maharatna ONGC is the largest crude oil and natural gas Company
in India, contributing around 70 per cent to Indian domestic
production.
 The primary business includes exploration and production of crude
oil, natural gas, LPG and other value-added petroleum products.
 ONGC is one of the most valuable public sector enterprises working
on Indian stock exchanges.
 It owns and operates more than 25,500 kilometers of pipelines in
India, including sub-sea pipelines. No other company in India
operates even 50 per cent of this route length.
Regulator Standards
 Application of new Indian Accounting Standards
All the Indian Accounting Standards issued under section 133 of
the Companies Act, 2013 and notified by the Ministry of
Corporate Affairs (MCA) under the Companies (Indian
Accounting Standards) Rules, 2015 (as amended) till the
financial statements are authorized have been considered in
preparation of these Financial Statements.
Ratio Analysis of ONGC
 Liquidity Ratios
 Activity Ratios
 Profitability Ratios
 Du Pont Analysis
 Current Ratios
2 2016, 1.72
Liquidity Ratios
2017, 1.55
1.5 • For the FY 2015-2016 and
2018, 1.1
2016-2017 both the liquidity
1 2016, 1.46
2017, 1.25 ratios look strong.
0.5 2018, 0.44 • The company has better
Current Ratio standing in
0
2016 2017 2018 comparison to the industry.
ONGC Industry • In FY 2017-2018 we can notice
a sharp decline in the liquidity
ratios of the company and the
Quick Ratio Industry.
1.5 2016, 1.46
2017, 1.23 • The Company’s decline can
1 be blamed on the substantial
increase in the current
0.5 liabilities attributed to the
2018, 0.3
short term borrowings taken in
0
2016 2017 2018
FY 2017-2018
Series 1
 Receivables Turnover Ratio Receivables T/O and Average
16 2016, 14.31 Collection period from
14 2017, 12.02 receivables (days)
12 2018, 10.93
2016, 10.97
10 • Company has better receivables
8 2017, 10.09 2018, 10.78 turnover than the industry, which in turn
6
gives lower collection period.
4
2 • But in FY 2017-2018 a marginal decline
0 in the receivables turnover and a
2016 2017 2018
consequent increase in collection
ONGC Industry period is seen.

Average Collection period from • Further, Cash and Cash equivalent

figures have seen a decline.
receivables (days)
35 • One of the reason could be increase in
30 2018, 33.39 the credit sales and debtors not
25
2017, 30.37 paying.
2016, 25.51
20 • Also, the company has concentration
15 of credit risk due to significant
10 receivables from Oil Marketing
2016 2017 2018
Companies.
ONGC
 Inventory Turnover
Inventory Turnover Ratio Ratio
14
2016, 13.81 2017, 12.63 2018, 12.86
13
2018, 12.7 • The can be seen that the
12
company is able to sell it’s
2017, 11.57
11 2016, 11.51 inventory quicker than the
10 peers that’s why the
2016 2017 2018 inventory turnover ratio is
ONGC Industry better than the industry.

Inventory on Hand (days) • It is also visible in the

30 inventory holding period.
29 2017, 28.8 2018, 28.7
28
27
2016, 26.4
26
25
2016 2017 2018
ONGC
 1 2016, 0.825
Fixed Assets Turnover
Assets Turnover
0.9 2017, 0.744
0.8 2018, 0.711
0.7
0.6 2018, 0.66 • These ratios indicate how
0.5
0.4 2016, 0.58 2017, 0.64 effectively the assets are
0.3
0.2
utilized and managed by
0.1 the company.
0
2016 2017 2018 • In operational terms, it
ONGC Industry means the company has
been able to utilize the
Current Assets Turnover assets effectively to
4
3.5 2018, 3.95 increase the sales.
3 2016, 2.53
2.5 • Also, the company is
2 2017, 2.6
1.5
managing the assets better
1 than the industry.
0.5
0
2016 2017 2018
ONGC
 Expenses Ratio
Expenses Ratio
50

45 2016, 44.38 2017, 44.09

40
2018, 37.74
35

30

25 2016, 25.44
2017, 23.04 2018, 22.27
20

15

10
2016, 7.73 2017, 7.65
2018, 6.53
5

0
2016 2017 2018
COGS Administration selling and distribution
 Profitability Ratios Profitability Ratio
55
2017, 49.58 2018, 52.83
50 2016, 46.33
2018, 51.01 • The company has
2017, 48.01 consistently performed
45
better over the years.
2016, 44.63
40 • FY 2017-2018 was a record
setting year for the drilling
35 2018, 33.98
2016, 30.35 operations. Which has
30 2017, 32.36 contributed to increase in
revenue from operations.
25
2018, 23.48
• As seen earlier, the
2017, 22.97 expenses have reduced
20
2016, 20.76 over the years which has
15
also contributed to better
2016 2017 2018 profits.
GP Margin NP Margin
Operating Profit Margin PBITD Margin
 Return on Net Worth
Return on Net Worth and Capital
11
10
2016, 9.73 2017, 9.64 2018, 10.31 Employed
9
2018, 9.49
8 • RONW/ ROE over the years
2016, 8.63 2017, 8.23
7 have not only increased
6 but also has been better
5 than the industry peers.
2016 2017 2018
• This shows good returns for
ONGC RONW Industry RONW
the equity holders over the
Return on Capital Employed years.
20
2018, 15.72
• Whereas, ROCE shows how
2016, 15.03 2017, 14.24
15 effectively the long-term
funds of the owners and
10
2016, 10.02 2017, 9.7
2018, 11.54 lenders used.
5
• It can be noticed that the
0
2016 2017 2018
ROCE has been better for
the company than peers.
ONGC ROCE Industry ROCE
 Equity Ratio Equity Ratio
1

• The Equity Ratio hasn’t

0.8 2017, 0.75 changed much over the
period.
2016, 0.698 • This indicates the
0.6 2018, 0.664
proportion of assets
financed by the owners.
0.4 • This suggests for every Rs.1
of an asset Rs. 0.75 is
owned by the owners.
0.2

0
2016 2017 2018
ONGC
 EPS Earning per share
16

15.5
2018, 15.54 • Basically it measures the
15
profit available for the
14.5
equity shareholders on per
14 share basis.
2017, 13.95
13.5 • As the profits have
13 increased Y-o-Y, which has
12.5
resulted in better EPS.
2016, 12.58
12 • The reduction in expenses
11.5
and the increase in sales
have contributed to the
11
same.
10.5

10
2016 2017 2018
ONGC
 DPS
Dividend per share
10 and Dividend Pay-
9
2018, 8.5
out Ratio
8
2016, 6.6
7 • The company is paying the
2017, 7.55
6 dividends consistently over the
5
three years.
2016 2017 2018 • The DPS has also improved
ONGC consistently.

Dividend Pay-Out Ratio • For the FY 2016-2017 the

Dividend Pay-out ratio is high
55 2017,
53.17
since the EPS of the company
50 had also gone up significantly.
45
2018,
• Already the company had
40
38.92 better DPS than the pervious
35
2016,
FY and to further that the
30
30.47 better EPS has also given high
25 Dividend Pay-out Ratio.
2016 2017 2018
ONGC
 Price-Earning
P/E Ratio Ratio
13.5
2017, 13.27

13 • It can be observed that

the P/E ratio for FY 2016-
12.5 2017 is way higher than the
P/E ratio of the other years.
12 • Since the MPS of the
company was quite high in
11.5 comparison to the other
2016, 11.38 2018, 11.4
two years.
11

10.5

10
2016 2017 2018
ONGC
 Du Pont Analysis

Financial
Net Profit Asset Turnover
Leverage
Margin (%) (%)
Ratio

2016 20.81 2016 29.16 2016 1.5

2017 23.04 2017 31.41 2017 1.33
2018 20.81 2018 34.94 2018 1.33

Return on Equity
11
2016, 9.73 2017, 9.64 2018, 10.31
10
9
8
7
6
5
2016 2017 2018
ONGC RONW
Share Price Movement
Major Events leading
to share price
fluctuations.
• 7/10/15 – ONGC sets up 280 wells for coal bed methane in Jharkhand. Rs.164.90
• 6/11/15 – Interim Dividend was declared. Rs. 171.06
• 21/12/15 – Moody affirms rating leading to 4% jump in stock. Rs. 154.03
• 12/2/16 – Q3 earnings dips 64%at Rs. 1285.6Cr. Rs. 147.83
• 4/10/16 – Hits 52 weeks because of big investment plans. 183.26
• 1/12/16 – 52 week high because of OPEC deal. 194.13
• 6/12/16 – Fixes date for bonus shares. 199.83
• 12/12/16 – OMCs hit record high since rise in oil prices. 209.73
• Jan’17 – Issued bonus shares. 2 shares for every 1 share held. 201.8
• 25/1/17 – 2nd interim dividend was declared. 205.70
• 31/1/17 – Final dividend declared . 211.8
• 15/3/17 – Merger talks with BPCL . 192.45
• 6/11/17 - Government gives 60% stake in ONGC fields to private firms. 200.45
• 23/1/18- ONGC-HPCL merger to help attain economies of scale. 208.7
Dividend declared over the period of
2 FYs and Bonus shares issued.
Details about the dividend history and FY 2017-2018
stock performance in comparison to SENSEX
Thank You