ONGC dips 2% on growth concerns

Oil and Natural Gas Corporation (ONGC) is trading lower by 2% at Rs 269 in an otherwise firm market after the state-owned oil exploration and production company said that its net profit will drop by over 47% to below Rs 10,000 crore this fiscal if the government forces it to shell out higher fuel subsidy. It had reported a net profit of Rs 18,924 crore in the previous fiscal 2010-11.

Upstream oil companies, led by ONGC, traditionally bear one-third of the actual revenues that retailers lose on selling diesel, LPG and kerosene at government-controlled prices.

But this year, the share of upstream companies would not be based on the actual under-recoveries, or revenue losses of retailers. Rather, they would be based on the projected notional under-recoveries that existed before the June fuel price increase and duty cuts, the PTI report suggests.

The stock opened at Rs 271 and hit a low of Rs 268 on the National Stock Exchange. A combined 1.2 million shares have changed hands on the counter till 1054 hours.