Oil And Natural Gas Corporation reports 33.0% CAPEX decline in 2016 and 18.9% Revenue decline
26-05-2016 • About Oil And Natural Gas Corporation (
$ONGC) • By InTwits
Oil And Natural Gas Corporation reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Oil And Natural Gas Corporation has high CAPEX intensity: 5 year average CAPEX/Revenue was 10.4%. At the same time it's in pair with industry average of 3.6%
- CAPEX is quite volatile: ₹1,610m in FY2016, ₹920m in FY2015, ₹1,890m in FY2014, ₹550m in FY2013, ₹1,300m in FY2012
- The company has business model with low profitability: ROIC is 9.0%
- It operates with high leverage: Net Debt/EBITDA is 1.1x while industry average is 0.2x
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
The company's Revenue dropped on 18.9%. Revenue decline was accelerating on average at -10.5 pp per annum in the last 5 years. Despite revenue decline the EBITDA margin expanded. EBITDA Margin increased on 5.3 pp from 26.7% to 32.0% in FY2016.
Net Income margin decreased slightly on 0.58 pp from 11.5% to 10.9% in FY2016. Net Income margin declined at -2.0 pp per annum in FY2012-FY2016.
Investments (CAPEX, working capital and M&A)
The company's CAPEX/Revenue was 8.8% in FY2016. CAPEX/Revenue decreased on 2.4 pp from 11.1% in FY2013 to 8.8% in FY2016. It's average level of CAPEX/Revenue for the last three years was 9.3%.
Return on investment
The company operates at low ROIC (9.0%) and ROE (7.7%). ROIC decreased slightly on 1.2 pp from 10.2% to 9.0% in FY2016. ROE decreased on 2.7 pp from 10.4% to 7.7% in FY2016. ROIC followed a declining trend at -4.1 pp per annum in the last 5 years. ROE declined at -3.6 pp per annum in the last 5 years.
Leverage (Debt)
Company's Net Debt / EBITDA is 1.1x and Debt / EBITDA is 1.4x. Net Debt / EBITDA decreased on 0.1x from 1.1x to 1.1x in FY2016. Debt increased on 3.9% while cash jumped on 106%. Net Debt/EBITDA followed a growing trend at 0.4x per annum in FY2012-FY2016.
Oil And Natural Gas Corporation has no short term refinancing risk: cash is higher than short term debt (124.5%).
Valuation and dividends
Oil And Natural Gas Corporation's trades at EV/EBITDA 5.5x and P/E 13.1x while industy averages are 17.8x and 21.9x. The company's EV/(EBITDA-CAPEX) is 7.6x with the industry average at 22.8x.
Financial and operational results
Oil And Natural Gas Corporation ($ONGC) key annual financial indicators| mln. INR | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 1,463,496 | 1,614,660 | 1,732,450 | 1,593,715 | 1,292,780 | -18.9% |
| EBITDA | 496,047 | 440,893 | 491,931 | 425,981 | 413,867 | -2.8% |
| Net Income | 281,436 | 242,196 | 265,065 | 183,335 | 141,238 | -23.0% |
Balance Sheet
|
|---|
| Cash | 277,434 | 195,446 | 232,429 | 59,160 | 121,703 | 105.7% |
| Short Term Debt | 107,579 | 118,429 | 174,319 | 63,690 | 97,744 | 53.5% |
| Long Term Debt | 52,086 | 88,427 | 316,809 | 475,755 | 462,719 | -2.7% |
Cash flow
|
|---|
| Capex | 191,431 | 179,609 | 149,385 | 169,060 | 113,242 | -33.0% |
Ratios
|
|---|
| Revenue growth | 24.5% | 10.3% | 7.3% | -8.0% | -18.9% | |
| EBITDA growth | 17.0% | -11.1% | 11.6% | -13.4% | -2.8% | |
|
|---|
| EBITDA Margin | 33.9% | 27.3% | 28.4% | 26.7% | 32.0% | 5.3% |
| Net Income Margin | 19.2% | 15.0% | 15.3% | 11.5% | 10.9% | -0.6% |
| CAPEX, % of revenue | 13.1% | 11.1% | 8.6% | 10.6% | 8.8% | -1.8% |
|
|---|
| ROIC | 25.2% | 18.6% | 15.8% | 10.2% | 9.0% | -1.2% |
| ROE | 22.4% | 16.8% | 16.3% | 10.4% | 7.7% | -2.7% |
| Net Debt/EBITDA | -0.2x | 0.0x | 0.5x | 1.1x | 1.1x | -0.1x |
Peers in Exploration & Production
Below we provide Oil And Natural Gas Corporation benchmarking against other companies in Exploration & Production industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.
Top companies by Revenue growth, %
| Top | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Aban Offshore ($ABAN) | - | 16.1% | 7.2% | 2.7% | -17.5% |
| Oil India ($OIL) | 18.5% | 1.1% | -2.8% | -2.2% | - |
| Cairn India ($CAIRN) | - | 48.3% | 7.1% | -21.9% | -41.1% |
| Shiv-Vani Oil & Gas Exploration Services ($SHIV-VANI) | 1.5% | -16.5% | -72.5% | -40.0% | - |
| |
|---|
| Median (4 companies) | 10.0% | 8.6% | 2.1% | -12.1% | -29.3% |
|---|
| Oil And Natural Gas Corporation ($ONGC) | - | 10.3% | 7.3% | -8.0% | -18.9% |
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Cairn India ($CAIRN) | 78.6% | 74.6% | 73.3% | 73.1% | 39.5% |
| Aban Offshore ($ABAN) | 59.7% | 55.4% | 57.0% | 58.9% | 56.7% |
| Selan Exploration Technology ($SELAN) | - | - | - | 44.3% | - |
| Oil India ($OIL) | 42.7% | 43.7% | 37.6% | 38.3% | - |
| Shiv-Vani Oil & Gas Exploration Services ($SHIV-VANI) | 46.7% | 45.1% | - | -56.2% | - |
| |
|---|
| Median (5 companies) | 53.2% | 50.2% | 57.0% | 44.3% | 48.1% |
|---|
| Oil And Natural Gas Corporation ($ONGC) | 33.9% | 27.3% | 28.4% | 26.7% | 32.0% |
Top companies by CAPEX/Revenue, %
| Top | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Cairn India ($CAIRN) | 25.0% | 9.3% | 15.3% | 38.1% | 19.1% |
| Oil India ($OIL) | 9.4% | 17.9% | 29.4% | 31.6% | - |
| Aban Offshore ($ABAN) | 20.9% | 25.4% | 36.1% | 22.7% | 25.3% |
| Selan Exploration Technology ($SELAN) | - | - | - | 5.8% | - |
| |
|---|
| Median (4 companies) | 22.9% | 17.9% | 29.4% | 27.2% | 22.2% |
|---|
| Oil And Natural Gas Corporation ($ONGC) | 13.1% | 11.1% | 8.6% | 10.6% | 8.8% |
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Cairn India ($CAIRN) | 16.6% | 22.7% | 21.3% | 10.0% | 0.5% |
| Selan Exploration Technology ($SELAN) | 23.2% | 21.9% | 18.6% | 9.7% | 3.3% |
| Aban Offshore ($ABAN) | 8.6% | 9.2% | 9.4% | 9.1% | 6.0% |
| Oil India ($OIL) | 19.8% | 18.3% | 10.5% | 8.6% | - |
| Shiv-Vani Oil & Gas Exploration Services ($SHIV-VANI) | 11.7% | 8.0% | - | - | - |
| |
|---|
| Median (5 companies) | 16.6% | 18.3% | 14.5% | 9.4% | 3.3% |
|---|
| Oil And Natural Gas Corporation ($ONGC) | 25.2% | 18.6% | 15.8% | 10.2% | 9.0% |
Top companies by Net Debt / EBITDA
| Top | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Aban Offshore ($ABAN) | 7.1x | 6.6x | 6.5x | 5.9x | 7.6x |
| Cairn India ($CAIRN) | -0.3x | -0.0x | -0.0x | -0.0x | -0.4x |
| Selan Exploration Technology ($SELAN) | -1.7x | -0.2x | -2.2x | -3.2x | -7.2x |
| |
|---|
| Median (3 companies) | -0.0x | 0.2x | 1.3x | -0.0x | -0.4x |
|---|
| Oil And Natural Gas Corporation ($ONGC) | -0.2x | 0.0x | 0.5x | 1.1x | 1.1x |
