MUMBAI/NEW DELHI: India's state-run Oil & Natural Gas Corp's net profit more than doubled in the fourth quarter, as the company benefited from higher crude oil prices and foreign exchange fluctuations.
ONGC, India's third-biggest company by market value, reported net profit of 56.44 billion rupees ($1 billion) for its fiscal fourth quarter ended March 31, up from 27.91 billion rupees a year earlier when the cost of subsidies was loaded in the fourth quarter.
Analysts, on average, had expected a net profit of 36.2 billion rupees, according to Thomson Reuters I/B/E/S.
ONGC said net sales rose 22 percent to 188.19 billion rupees, as the company benefited from the nearly 12 percent year-on-year rise in its average sale price for crude oil.
ONGC does not fully benefit from rising crude prices because India caps prices of petrol products such as diesel, cooking gas and kerosene and producers such as ONGC share the cost of subsidising refineries by selling crude to them at a discount.
Net realisations from oil sales, after giving discounts to state-run refiners, rose to $44.32 per barrel from $38.75 a barrel a year earlier.
ONGC said its net profit was reduced by 82.1 billion rupees for the quarter by gross discounts of 141.70 billion rupees to state-run refiners. It had given discounts of 121.36 billion a year earlier.
"This year the subsidy payments were higher but were evenly spread, compared to last year when there was a sharp spike in the last quarter," Chairman Sudhir Vasudeva told reporters at a press conference after announcing the results.
Gross discounts for the full fiscal year jumped sharply to 444.7 billion rupees, but nearly half of the 249 billion rupees discount in the previous year had been charged in the fourth quarter.
Shares in ONGC have traded nearly unchanged in 2012, underperforming a 6.4 percent rise in the main stock index . The stock closed 1 percent, valuing the firm at $39.2 billion, ahead of the results.
ONGC, which has been investing heavily to maintain output from its old fields, has outlined capital expenditure of 330.65 billion rupees in the current financial year, Vasudeva said.
The company has said it aims to raise crude oil production by 15 percent to 28 million tonnes, or 560,000 barrels per day (bpd), by March 2014.
"We think under-recoveries (shortfall between costs and state-capped retail prices) were at their highest in the quarter, and if there are price increases, ONGC will be a key beneficiary," said Vinay Nair, analyst at Karvy Stock Broking.
"We expect profit in FY13 to be better than the previous fiscal year," he added.
Heavy subsidies on diesel, LPG and kerosene helped push India's fiscal deficit to 5.9 percent of GDP in the most recent fiscal year, but despite the need to shore up government finances, raising prices is politically fraught for a weakened Congress party-led government.
Indian state oil companies last week raised retail gasoline prices by 7.54 rupees/litre, but the government, faced with street protests, is yet to take a decision on diesel, LPG and kerosene.
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