ONGC’s performance hinges on recovery in oil realizations

Rising crude oil prices have come as a ray of hope for ONGC as they are likely to support the company’s net oil realization and in turn, earnings.

In 2020, a drop in crude prices in the wake of the pandemic had dimmed the company’s earnings prospects significantly. Brent crude oil future prices moved in the $37-40/barrel range at the start of the December quarter. But prices are now trading close to 11-month highs with Brent above $50 per barrel. Sustaining the levels, however, remains crucial.

ONGC’s stock has gained about 60% since October, a sign that investors are noticing the change in prospects.