Oil & Natural Gas Corporation (ONGC) has announced that S&P Global Ratings has withdrawn its 'BBB' long-term issue rating on the $600 million senior unsecured notes due 2026 issued by ONGC Videsh Vankorneft Pte. Ltd., a wholly owned step-down subsidiary of ONGC Videsh in Singapore. This withdrawal comes at the issuer's request, as per the company's regulatory filing.

Key Points

• The withdrawal affects only the $600 million notes due 2026 issued by ONGC Videsh Vankorneft Pte. Ltd.
• S&P's 'BBB' issuer credit ratings on ONGC remain unchanged.
• The 'BBB' long-term issue credit rating on the $300 million senior unsecured notes due 2029 issued by ONGC also remains unaffected.

Impact on ONGC's Credit Profile

Despite the withdrawal of the rating on ONGC Videsh Vankorneft's notes, ONGC's overall credit profile appears to remain stable. The company continues to maintain strong credit ratings from various agencies:

Implications for Investors

The withdrawal of the rating on ONGC Videsh Vankorneft's notes does not appear to signal any change in the credit quality of ONGC or its subsidiaries. Investors should note that:

1. The withdrawal was made at the issuer's request, which is a common practice in the credit rating industry.
2. ONGC's own credit ratings remain unchanged, indicating continued confidence in the company's financial strength.
3. The stable outlook across multiple rating agencies suggests a consistent view of ONGC's credit profile.

Conclusion

While the withdrawal of the credit rating on ONGC Videsh Vankorneft's $600 million notes is noteworthy, it does not appear to have a significant impact on ONGC's overall credit standing. The company continues to maintain strong ratings across various debt instruments, reflecting its solid financial position in the oil and gas sector.

Investors and stakeholders should continue to monitor ONGC's financial performance and any future changes in credit ratings or outlooks for a comprehensive understanding of the company's credit profile.

Oil & Natural Gas Corporation (ONGC), India's state-owned oil exploration and production giant, saw its shares gain 2.5% to Rs 255 despite reporting a decline in quarterly profit. The company's financial results and strategic plans have drawn mixed reactions from analysts.

Financial Performance

ONGC reported a significant drop in its quarterly profit, primarily due to lower oil prices. Here's a breakdown of the key financial metrics:

Despite the profit decline, ONGC has declared an interim dividend of Rs 6.00 per equity share, amounting to a total payout of Rs 7,548.00 crore.

Analyst Perspectives

The company's performance and future outlook have elicited varied responses from market analysts:

• Goldman Sachs: Maintained a 'Sell' rating with a target price of Rs 220.00.

  • Cut EBITDA estimates by 13%.
  • Modeled a conservative 2% growth against ONGC's guided 5% CAGR for oil and gas production.

• Nomura: Maintained a 'Neutral' rating but reduced the target price to Rs 270.00 from Rs 275.00.

  • Lowered consolidated EPS estimates by 14% and 7% for the next two fiscal years.

Strategic Plans

ONGC's management has outlined several key initiatives for the future:

1. Annual capital expenditure of Rs 30,000.00-35,000.00 crore.
2. Cost reduction target of Rs 5,000.00 crore.
3. Expansion of renewable energy capacity to 10 GW by 2030.

These plans indicate ONGC's focus on balancing traditional oil and gas operations with a growing emphasis on renewable energy sources.

Investor Relations

In a recent corporate filing, ONGC announced that the audio recording of its conference call with analysts and investors has been made available on the company's website. This move aligns with ONGC's commitment to transparency and compliance with SEBI regulations.

While ONGC faces challenges from fluctuating oil prices and changing energy landscapes, its strategic initiatives and dividend declaration suggest a balanced approach to maintaining shareholder value while preparing for future energy transitions.