S&P Global Ratings has lowered its assessment of state-run oil producer Oil and Natural Gas Corporation’s (ONGC’s) stand-alone credit profile to ‘BBB+’ from ‘A-’ due to lower oil and gas prices and disruption in demand for refined products, which is seen to weaken the company’s cash flow and leverage till FY22-end.
The agency estimated that ONGC’s consolidated earnings before interest taxes depreciation and amortisation (ebitda) would decline by 30%-35% during FY21. Though its refining business will likely benefit from the currently low crude prices, gradual recovery of the low demand scenario is seen to keep the margins subdued. With demand gradually recovering and oil prices strengthening from current levels, ONGC’s consolidated ebitda is seen to be Rs 58,000 –60,000 crore in FY22.
