Q4 FY25: ONGC reports sharp drop in profit due to lower price realisation & higher costs

New Delhi: Oil and Natural Gas Corporation (ONGC), India’s largest upstream oil and gas producer, reported a significant decline in its standalone and consolidated profitability for the fourth quarter and the full financial year 2024–25. The company announced its financial results late on May 21 evening, after market hours. On Thursday, ONGC shares opened at Rs 248.07 apiece and closed lower at Rs 242.10 on the NSE, reflecting investor reaction to the earnings.

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Q4 and annual standalone performance

On a standalone basis, ONGC reported a net profit of Rs 6,448 crore for the January–March quarter (Q4 FY25), marking a 34.7 percent drop from Rs 9,869 crore in the same period last year. This was also a 21.7 percent decline sequentially from Rs 8,240 crore in the previous quarter. Revenues remained largely flat at Rs 34,982 crore compared to Rs 34,637 crore in Q4 FY24, though they showed a modest increase from Rs 33,717 crore in the December quarter.

For the full financial year ended March 31, 2025, the company’s standalone net profit fell 12.1 percent to Rs 35,610 crore from Rs 40,526 crore in the previous fiscal. Revenue from operations declined marginally to Rs 1,37,846 crore from Rs 1,38,402 crore a year earlier. The fall in earnings was more pronounced in key profitability ratios, with EBITDA declining to Rs 71,112 crore from Rs 77,774 crore in FY24. The net profit margin narrowed to 25.83 percent from 29.28 percent, while the operating margin dipped from 41.25 percent to 37.26 percent.

Falling price realisations erode profitability

A critical factor contributing to the downturn was the reduction in price realisation. ONGC’s average crude oil realisation for the year was USD 78.67 per barrel, significantly lower than the USD 87.10 per barrel it earned in FY24. Similarly, the company realised Rs 6.50 per standard cubic metre (scm) of natural gas, down from Rs 7.50 per scm in the previous year. This softness in international energy prices directly impacted the company’s topline, even though production volumes remained largely stable.

Higher costs and exploration write-offs weigh on earnings

In addition to the price pressures, ONGC’s cost structure became heavier during the year. The company incurred higher exploration costs, particularly in the fourth quarter, where write-offs related to exploratory wells surged to Rs 5,046 crore from Rs 1,516 crore a year ago. Statutory levies, although slightly lower than last year, remained substantial at Rs 30,968 crore for FY25. These factors, combined with lower other income, eroded the company’s bottom line.

Segmentally, offshore operations, which form the bulk of ONGC’s business, saw revenues of Rs 95,627 crore and segment profits of Rs 38,383 crore in FY25, down from Rs 94,270 crore and Rs 44,408 crore in the previous year. Onshore operations contributed Rs 42,219 crore in revenue and Rs 6,689 crore in profit, slightly lower than the Rs 44,132 crore and Rs 6,185 crore recorded in FY24.

Dividend payout

Despite the drop in earnings, the company’s financial position remained strong. ONGC’s net worth improved to Rs 3,16,284 crore by the end of March 2025, up from Rs 3,05,977 crore a year earlier. Its debt-to-equity ratio remained conservative at 0.03, and interest coverage ratio improved to 222.33 from 165.16, indicating robust interest servicing capacity.

The Board of Directors recommended a final dividend of Rs 1.25 per share. Including the interim dividends of Rs 6 and Rs 5 declared earlier during the year, ONGC’s total FY25 dividend payout comes to Rs 12.25 per share or Rs 9,838 crore in aggregate.

Consolidated results show broader pressure

The consolidated financial picture also mirrored the standalone challenges. ONGC’s group net profit for FY25 dropped 9 percent to Rs 42,321 crore from Rs 46,521 crore in the previous year. Total revenue on a consolidated basis stood at Rs 6,29,337 crore, down from Rs 6,61,329 crore last year.

The group includes major subsidiaries such as ONGC Videsh, Mangalore Refinery and Petrochemicals Ltd (MRPL), Hindustan Petroleum Corporation Ltd (HPCL), and ONGC Petro additions Ltd (OPaL), which became a subsidiary during the year following increased equity infusion by the parent.

Downstream weakness adds to consolidated strain

The decline in consolidated profit was largely due to weaker performance in the downstream segment, especially from refining and petrochemicals subsidiaries. These businesses faced margin compression amid volatile crude oil prices and elevated input costs. While upstream operations remained profitable, they could not fully offset the pressures faced by the group’s downstream and international businesses.

ONGC’s cash flow from operations remained strong at Rs 73,010 crore. However, the company’s capex and investments in subsidiaries, particularly OPaL, led to significant investing outflows of Rs 46,789 crore during the year.

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