ONGC

ONGC, the nation's most profitable company, will see its capital expenditure rise
to Rs 36,249.37 crore as compared with Rs 34,813 crore in the current fiscal,
according to the Budget 2015-16 document. Its overseas investment arm, ONGC
Videsh Ltd, will invest another Rs 10,402 crore in 2015-16. This, however, is
lower than the investment of Rs 12,387 crore in the current fiscal.
(Source: ET 1 March 2015)
ONGC says its natural gas out shall jump to 81% to 116 million standard cubic
meters per day by 2019. The increased production will come from Krishna
Godavari basin gas block as well as western offshore discoveries.
ONGC in December had announced discover of new oil and gas well due to which
the board had announced a 100% dividend to its shareholders.
ONGC has continuously giving dividends to its shareholders and is the largest
profit making PSU.
The reason I would like to choose ONGC is due to its consistent growth 4-5% in
the past 5 years. And it following the concept of Sustainable Development. ONGC
has been looking for renewable sources of energy and moving toward low carbon
green energy regime. How the company shall perform in the coming future what
will be its growth rate as hydrocarbon base has been discovered in the Krishna
Godavari basin. The company has made increase in saving due to energy
conservation measures from 1.67 billion (INR) in 2008-09 to 4.29 billion (INR) in
2012-13 which is a huge amount (source: sustainability report 2013 ONGC)
As the current share price of ONGC are 320 one of the lowest price. And due to
the latest discover its expected to rise in the future.
Its worth buying the ONGC shares now and keep it and sell it after a long run. As
it would be profitable as we will be getting dividends and the price of the share is
expected to rise in the future and be stable. And I would like to see the same
when I make a projections for the company.
Factors that affect the growth of ONGC:
The GDP of the country.
Findings of wells.
Global crude oil prices.
The Supply chain,etc.
What a Rs 50,000 investment in companys IPO would have turned into
over a 9 year holding period?
Suppose you had Rs 50,000 to spare in 2004. You decided to invest in ONGCs
IPO as a retail investor. The shares were sold at Rs 712.50 apiece to retail
investors. You received a total of 70 shares (rounded for ease) for your
investment.
First of all, after these 9 years, your 70 shares would have grown to 421 shares
as a result of 2 bonuses (2:1 and 1:1) and a split (from face value of 10 to 5). At
a market price of Rs 320 (at time of writing this post), your stocks would be
worth Rs 1,34,737. To top it, you already know that ONGC is a generous dividend
payer due to governments mandate. This means that in past 9 years, you would
have received 19 dividend payouts totalling a sum of Rs 30,035. (Source:
stableinvestor.com information about stock split (from face value of 10 to 5) and
bonuses( 2:1 & 1:1) verified from annual report).