ONGC surpasses estimates in Q2 profits aided by lower tax expenses

Oil and natural gas corporations announced an unexpected boost in profits in its results for the second quarter on Monday. This rise was driven by a reduction in tax expenses following the removal of the levy on petroleum crude.

The oil and gas company's standalone profit surged by 17 per cent to Rs 119.84 billion for the quarter ending September 30, surpassing analysts' expectations of Rs 91.23 billion, according to data compiled by LSEG.

During the quarter, the windfall tax which had been imposed on petroleum crude in 2022, was abolished as global oil prices eased compared to the previous year.

The standalone earnings of this entity, which accounts for nearly 71 per cent of domestic crude oil production, exclude profits from its joint ventures and international operations.

The state-owned entity reported a 6.5 per cent decline in tax expenses, totaling Rs 30.52 billion for the three-month period.

Its revenue operations, however, fell 3.6 per cent to 338.81 billion rupees, falling short of analysts' estimate of Rs 340.56 billion.

ONGC's crude oil price realization or the price at which it sells its product, dropped by 7.7 per cent to $78.33 per barrel during Q2, as global crude oil prices fell by approximately 17 per cent during the period.

Domestic fuel consumption during the quarter also fell, largely due to above-average rainfall, which slowed irrigation and the use of farm machinery that typically consumes diesel.

Automobiles sales, a major driver of diesel demand, also experienced a decline.
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