Shares of Oil and Natural Gas Corporation Limited (ONGC) surged over 5 per cent to touch a 52-week high of Rs 184.75 on 1 September after Fitch Ratings affirmed a BBB- rating (stable outlook) for the state-owned oil marketing company. The rating shows that ONGC is considered to have a moderate level of credit worthiness. The business rating also shows that the future outlook for ONGC is stable.
"We maintain ONGC's Standalone Credit Profile (SCP) at 'bbb+', which reflects ONGC's scale as the largest oil and gas (O&G) producer in India, its significant reserves and production, and its vertically integrated and geographically diversified business model, which are comparable with those of peers rated in the 'A' category by Fitch," the ratings agency said on August 31.
At 2:50 pm, ONGC shares were trading 4.31 per cent higher at Rs 181.80 on the NSE.
According to Fitch, ONGC’s status, ownership, and control by the government are ‘strong’ due to the state’s majority ownership board appointments. It expects the government to extend support to ONGC, if required, due to its importance in India’s energy sector as the largest national upstream company. ONGC is the country’s third-largest refiner and marketer of petroleum products.
The ratings agency said it expects ONGC’s consolidated capex to increase to Rs 603 billion by fiscal 2026–27 from Rs 490 billion in fiscal 2022–23 as its core capex remains high and green investments increase. This includes Rs 300–325 billion of domestic upstream capex to accelerate development and exploratory drilling, for capital projects, and for the completion of the KG-DWN-98/2 project on India’s eastern coast, and around Rs 200 billion of annual capex at ONGC’s various subsidiaries.
In FY23, ONGC produced 1.06 mmboepd (million barrels of oil equivalent per day) of O&G. It had proved reserves of nearly 5.9 billion barrels of oil equivalent and a reserve life of around 15 years.