Oil and Natural Gas Corporation Limited (ONGC) is a cornerstone of India’s energy sector, playing a pivotal role in the exploration, production, and supply of oil and natural gas. As a state-owned enterprise, ONGC operates under the administrative control of the Ministry of Petroleum and Natural Gas, Government of India. This article provides an in-depth look into ONGC’s business model, its financial performance for Q3 FY25 (October–December 2024), and available details on its promoters and shareholding pattern as of April 6, 2025.
ONGC Business Model: A Closer Look
ONGC’s business model centers on the upstream segment of the oil and gas industry, focusing on exploration and production (E&P) of crude oil and natural gas. As India’s largest producer in this domain, the company operates across onshore and offshore fields, with significant assets in regions like Mumbai High, Assam, and the Krishna-Godavari Basin. Its operations are structured to meet domestic energy demands while contributing to India’s energy security.
Core Operations
- Exploration and Production (E&P):
- ONGC explores and extracts hydrocarbons from sedimentary basins across India and select international locations. Its domestic production accounts for a substantial share of India’s crude oil and natural gas output.
- The company employs advanced seismic surveys, drilling technologies, and reservoir management techniques to identify and develop reserves.
- Crude Oil and Gas Sales:
- Crude oil is sold to refineries at international benchmark rates, adjusted for windfall taxes when applicable. Natural gas is supplied to industrial users, power plants, and fertilizer manufacturers, often under regulated pricing mechanisms set by the government.
- Joint Ventures and Subsidiaries:
- ONGC collaborates with private players and operates subsidiaries like ONGC Videsh Ltd. (OVL) for international E&P, and Mangalore Refinery and Petrochemicals Ltd. (MRPL) for downstream refining. These entities diversify its revenue streams but remain secondary to its upstream focus.
- Asset Redevelopment:
- Aging fields, such as Mumbai High, are a significant part of ONGC’s portfolio. The company invests in enhanced oil recovery (EOR) techniques and redevelopment projects to sustain production levels.
Revenue Model
ONGC’s revenue is heavily tied to global crude oil prices and domestic gas pricing policies. In Q3 FY25, its net realization for crude oil was $72.57 per barrel, down 10.6% year-on-year (YoY) from $80.76 in Q3 FY24, reflecting softer global prices. Gas sales are influenced by government-administered prices, which can limit profitability when costs rise. The company also earns from condensate and value-added products, though these are minor contributors.
Challenges in the Business Model
- Price Volatility: Dependence on global oil prices exposes ONGC to fluctuations beyond its control.
- Regulatory Constraints: Government policies, including windfall taxes and gas price caps, impact margins.
- Aging Assets: Declining output from mature fields requires continuous capital expenditure, straining finances.
- Competition: Private players like Reliance Industries and international firms challenge ONGC’s dominance in newer basins.
Despite these challenges, ONGC’s scale, government backing, and strategic focus on domestic energy needs provide stability. Its efforts to boost production—such as a 2.2% YoY increase in crude oil output to 4.65 million metric tonnes (MMT) in Q3 FY25—demonstrate operational resilience.
Q3 FY25 Earnings: Financial Performance Breakdown
ONGC released its Q3 FY25 results on January 31, 2025, revealing a mixed performance amid lower crude prices and operational improvements. Below is a detailed analysis of the financials.
Key Financial Metrics
- Revenue: Consolidated gross revenue was Rs 1.66 trillion, a marginal decline of 0.7% YoY from Rs 1.67 trillion in Q3 FY24. The drop reflects weaker oil prices, despite steady production volumes.
- Net Profit: Consolidated net profit attributable to owners fell 19.4% YoY to Rs 8,621.69 crore, down from Rs 10,703.13 crore in Q3 FY24. Sequentially, it decreased 16.07% from Rs 10,272 crore in Q2 FY25. The decline was driven by lower realizations and higher expenses.
- Crude Oil Realization: Net realization after windfall taxes was $72.57 per barrel, compared to $80.76 in Q3 FY24, a 10.6% drop. Global Brent prices averaged $73.5–$75 during the quarter, with a brief spike to $80.9 in October.
- Production Volumes:
- Crude Oil: Standalone production (excluding condensate) rose 2.2% YoY to 4.65 MMT, continuing a two-quarter growth trend. For 9M FY25, output was 13.85 MMT, up 1.2% YoY.
- Natural Gas: Standalone gas production increased 0.3% YoY to 4.978 billion cubic meters (BCM), reversing prior declines.
Operational Highlights
- Cost Pressures: Higher operational costs and depreciation expenses contributed to the profit dip, though specific figures weren’t detailed in public releases.
- Dividend: The Board declared a second interim dividend of Rs 5 per equity share (face value Rs 5), equating to a 100% payout for FY25. The record date was set for February 7, 2025, signaling confidence in cash flow despite profit declines.
Nine-Month Performance (9M FY25)
- Crude oil production grew 1.2% to 13.85 MMT, while gas output trends remained positive. Financial specifics for 9M FY25 were not fully disclosed in the Q3 release, but the production uptick suggests operational stability.
Promoter Details
ONGC’s primary promoter is the Government of India, holding a majority stake through the Ministry of Petroleum and Natural Gas. As a public sector undertaking (PSU), its strategic direction aligns with national energy policies. Specific details on individual promoters or entities within the government structure are not typically disclosed beyond this broad ownership.
- Promoter Holding: As of December 2024, the Government of India held 58.89% of ONGC’s equity, unchanged from prior quarters. No promoter shares are pledged, reflecting stable ownership.
The consistent stake underscores ONGC’s role as a state-controlled entity, prioritizing energy security over purely commercial objectives. This ownership structure limits flexibility but ensures government support during downturns.
Shareholding Pattern
The shareholding pattern as of December 2024 provides insight into ONGC’s ownership distribution. Below are the details:
- Promoters: 58.89% (Government of India)
- Foreign Institutional Investors (FIIs): Approximately 8–10% (exact figures vary slightly by source; no significant change reported in Q3 FY25 updates).
- Domestic Institutional Investors (DIIs): Around 15–17%, including mutual funds and insurance companies like LIC, which are key PSU investors.
- Public and Others: Roughly 14–16%, comprising retail investors and smaller entities.
Observations
- Promoter Dominance: The 58.89% stake ensures government control, typical of Maharatna PSUs.
- Institutional Interest: DIIs hold a larger share than FIIs, reflecting domestic confidence in ONGC’s stability, while FIIs remain cautious amid global commodity volatility.
- Public Stake: The retail portion is modest, consistent with PSU stock trends where institutional ownership dominates.
No major shifts in shareholding were reported in Q3 FY25, suggesting stability in investor composition. Updates beyond December 2024 would require fresh filings, unavailable as of April 5, 2025.
Disclaimer: This article on ONGC’s business model, Q3 FY25 earnings, promoter details, and shareholding pattern is based on publicly available information as of April 6, 2025. It is for informational purposes only and not financial or investment advice. While accurate to the best of our knowledge, the data may not be complete or current, and readers should verify details with official sources before making decisions. The author is not liable for any losses or consequences from using this information.
