ONGC's Q3FY21 revenue and EBITDA was in-line with our estimates, while PAT was below our estimates on the back of higher than expected tax rate and lower other income. Oil/Gas production volume declined 3%/6% YoY to 5.6mmt/5.8bcm. Effective tax rate came at 51% while other income was also down by 13% YoY to Rs12 bn. The company is forming a 100% subsidiary for natural gas/LNG sourcing and marketing.Along with the group companies ONGC needs 2.5-4mmt of natural gas. It expects production volume from KG basin to averge 3.4mmscmd in FY22 and 8.5mmscmd in FY23 and peak production of 15mmscmd to reach in FY24.

IDBI Capital downgrades ONGC to 'Accumulate' from 'Buy'.

The broking firm said, "We expect USD 2.6/ 2.8/mmbtu APM gas price for FY22E/23E and any upwards revision due to change in gas pricing formula may have an upside risk. We raise our TP upwards to Rs 106 from earlier Rs 85 to factor-in improved business outlook and stronger performance by its other divisions. We downgrade the stock to Accumulate from earlier Buy due to significant rise in valuation since our last report."

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