New Delhi: Oil & Natural Gas Corp (ONGC) posted its third straight rise in quarterly profit on higher oil prices, and said the hike in state set natural gas prices would have a positive impact in the quarters ahead.
Earlier this month, the government more than doubled the prices of natural gas produced by state firms, bringing a windfall for ONGC which will raise rates for the first time in five years.
ONGC, which gets 13% of its revenues from natural gas, will see future upsides in its growth from the price hike, chairman and managing director RS Sharma said in a statement.
Growth would also come from equity in subsidy sharing mechanism in crude oil sales and higher production of oil and gas, he added.
The group is required to partially subsidize the sale of fuel to state retailers, which sell petrol and diesel at government-set prices below the market rate, affecting its earnings.
State-run ONGC’s subsidy payout jumped nearly five-fold to Rs4,999 crore for the March quarter, compared to Rs852 crore a year ago.
But Sharma said higher oil prices resulted in higher net realizations despite the increase in subsidy. Net proceeds after subsidy payouts rose to $51.42 a barrel in its fiscal fourth quarter ended March from $43.40 a year earlier.
On Friday, crude oil was hovering around $75 a barrel.
ONGC reported a net profit of Rs3,776 crore for January-March, up from Rs2,207 crore a year earlier. Net sales rose to Rs14,713 crore from Rs13,704 crore a year ago.
Ahead of the results, shares in ONGC, India’s second-most valuable company with a market worth of $51 billion, rose 0.5% to Rs1,130.95 in a Mumbai stock market that rose 1.2%.
The shares have declined 4% so far in 2010, matching a 3.5% fall in the BSE Sensex.