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9 
Company n o: ................................ ................................ ................................ ..................... 3|
[ and Na a Gas Seco n Inda:................................ ................................ ...................... 3|
Compeo s: ................................ ................................ ................................ ......................... 4|
Pe o mance o company o pas 5 yea s................................ ................................ .............. 4|
Raos Ana yss ................................ ................................ ................................ ..................... 6|
P oab y aos: ................................ ................................ ................................ ............ 7|
Tu nove aos:................................ ................................ ................................ ................. 8|
Ludy Raos: ................................ ................................ ................................ ............... 8|
So vency aos: ................................ ................................ ................................ ................ 8|
Du-Pon Ana yss: ................................ ................................ ................................ ............. 9|
Invesmen Va uaon aos:................................ ................................ ............................. 10|
Ana yss on non nanca pa amee s o [NGC:................................ ................................ ..11|

 
9  

[ and Nau a Gas Co po aon ([NGC) s Asa¶s a es o p oducng
and exp o ng company whch p oduces c ose o 30% o Inda¶s c ude o consumpon. I
dea s n he o and nau a gas commodes whch s one o he p omnen seco on whch
many economes o he wo d a e dependan and hese wo commodes make he a ges
sha e o wo d  ade as we .

The company was o med as an eo  o make Inda have s own esou ces o o and nau a
gas. I was done n he yea 1955 and an o and nau a gas d eco ae was o med wh an
a ance wh he geo ogca su vey o Inda. Soon he d eco ae was enhanced o a
commsson gvng mo e powe s and esou ces and n he yea 1959 he commsson was
conve ed o a sauo y body. As pe he ac o pa amen h ough whch he change
happened saes he uncon o [NGC as "o p an, p omoe, o gane and mp emen
p og am o deve opmen o Pe o eum Resou ces and he p oducon and sa e o pe o eum
and pe o eum p oducs p oduced by , and o pe o m such ohe uncons as he Cen a
Gove nmen may,  om me o me, assgn o  ".

Snce hen [NGC s dong s job we . [ ese ves have been ound n Guja a and Bombay
hgh. Du ng 1990s when he coun y wen o g oba aon eo ms, majo dsnvesmen
was made n [NGC and gove nmen sake came down o 84.11%. [NGC has c oss ho dng
n Gas Auho y o Inda (GAIL) and MRPL  om Adya B a G oup. Wh hs 
dve sed no downs eam seco . [NGC s a so makng nvesmens ousde Inda ke
Venam, Sudan and Sakha n.

P esen y  s anked 3 d o and nau a gas Exp o aon and P oducon Company n he
wo d and 23 d among eadng g oba ene gy p aye s as pe P as 250 G oba Ene gy
Companes s o he yea 2009.


9  9
Jeevan Bha  Bu dng, Towe II,
124, Ind a Chowk, 8h F oo ,
New De h 110001
Webse: www.ongcnda.com
Te : 91-11-23301000
Fax: 91-11-23316413
E-ma : ende h.ongc.co.n


 



 [ andnau a gas a e majo sou ce o ene gy
and Inda s he 4h a ges ene gy consume n he wo d ae Uned Saes (US), Chna and
Japan. C ose o 40% o he oa ene gy demand s u  ed by o and nau a gas. Bgges
consume s o nau a gas a e e  e and ene gy seco whch have a sha e c ose o 75% n
oa consumpon. [ s consumed o  anspo aon, ene gy seco and ndus a seco .
Acco dng o epo  o Indan B and Euy Foundaon (IBEF he consumpon o nau a
gas has g own a a Compounded Ave age G owh Rae (CAGR) o 2.74% pe yea bu
p oducon has g own a on y 2.25% on y beween yea s 2000 and 2005. The ae has
nc eased o boh by he yea 2010 bu p oducon s a ess han wha consumpon s n he
naon. Th ough new exp o aons and p oducon o o and nau a gas, he coun y s jus
 yng o mgae a sma p opo on o money ha  has o spend ohe wse n mpo  o ha
amoun o o and gas. C ose o 75% o he oa demand o c ude o s me h ough mpo s
on y. Bu, acco dng o epo  o BP Sasca Ene gy Su vey, Inda had p oved o ese ves
o 5.459 b on ba e s a he end o 2007. Snce n he comng yea s a so majo po on o
ene gy consumpon w be me h ough c ude o on y and he demand o o and gas s
ke y o nc ease, he seco w pe o m we agan. Due o he g oba c ss he e was a
downu n n he ma ke and ndus a p oducon a so wen no a s ump, bu he condons
a e mp ovng now. Bu nau a gas p ces n Inda come unde egu aed ma ke and
gove nmen o Inda x he p ce o nau a gas. The p ces somemes a e se so ow n he
ma ke ha a ha ae  d ec y compees wh he coa ma ke and hus nau a gas busness
s no gene ang much o evenues o he companes. Howeve , companes ke Gas
Auho y o Inda Lmed (GAIL) ho ds abso ue monopo y n ds buon and  ansmsson
o nau a gas n he economy. Thus he s ucu e o he ene gy ma ke n Inda s good o o
ex acon and p oducon busness.

9 

  [NGC, beng a pub c seco un su e y has a compeve advanage ove
s compeo s as  con o s c ose o h ee-ou h o he ma ke sha e. Gove nmen on he
sng noe o ene gy demand has de egu aed he hyd oca bon seco and as a esu  a numbe
o p vae p aye s a so eme ged apa   om de en sae owned ene p ses. Companes ke
Guja a Sae Pe o eum Co po aon Ld, [ Inda Lmed and Taa Pe odyne Ld. a e
d ec compeo s o [NGC. The e a e c ose o 8 companes n Inda whch a e d ec y
compeng wh [NGC on o exp o aon and ex acon. Fo hs ana yss he o owng 8
companes a e chosen o ndus y ana yss due o daa cons ans  om p owess.

[ & Nau a Gas Co pn. Ld. [ N G C Vdesh Ld.


Bombay Gas Co. Ld. [ Inda Ld.
Guja a Sae Pe o eum Co pn. Ld. Se an Exp o aon Techno ogy Ld.
Hndusan [ Exp o aon Co. Ld. Taa Pe odyne Ld.



   
 
 The pe o mance o [NGC can be seen
h ough he g aphs gven be ow.

 , 



  9
70000 35000
60000
50000 25000
40000 15000
30000
20000 5000
Ma Ma Ma Ma Ma Ma Ma Ma Ma Ma Ma Ma
2004 2005 2006 2007 2008 2009 2004 2005 2006 2007 2008 2009

Sa es Expenses PAT PBT EBITDA


 



-

5000
4000
3000
2000
1000
0
Ma 2004 Ma 2005 Ma 2006 Ma 2007 Ma 2008 Ma 2009

I we obse ve ove pas 5 yea s, he pe o mance o [NGC s no sasaco y. Though he
sa es a e nc easng,  s nc easng a a dec easng ae bu a he same me he expenses a e
nc easng a a hghe ae as compa ed o sa es. A so he g owh n p o ae ax has u ned
no negave g owh ae 4 yea s o connuous a . The p oab y o he  m has ue a
b sab ed and as  can be seen he cu ves a e  aened. Mo eove an ne esng hng o
obse ve s ha hough he p os a e sab ng o he company  om sa es, he ncome  om
nanca se vces has been connuous y nc easng. The co e ope aon o he company s o
and nau a gas. Thus  can be sad ha he company s  yng o n ae s ea nngs by usng
nanca ns umens.



60%

50%

40%
AT %age Change
30%
Sa es
20%
Expenses
10%

0%
Ma 2005 Ma 2006 Ma 2007 Ma 2008 Ma 2009
-10%

Takng anohe ook a some o he gu es depcng he p oab y o he seco and
company,  can be seen ha he pe cenage sha e o [NGC n he seco has come down by
a mos 7.5 pe cen pons n e ms o sha e n p o and c ose o 13 pe cen pons. Ths s
dene y a hng o wo y o [NGC. I has happened n a pe od o jus 5 yea s.

200 2006 2007 2008 2009


9



 0.875 0.841 0.839 0.842 0.796
9 0.88 0.85 0.83 0.76 0.75
9
-
   0.47 0.47 0.45 0.44 0.44
   $|

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(Laes ava ab e annua epo  o he company s 2008-2009)1

The ao ana yss o [NGC and compa son wh he ndus y ave age s acua y based
owa ds [NGC posve y because o he smp e eason ha [NGC has mo e han 70% o
ma ke sha e n s seco . Thus seeng he pe o mance o [NGC n so aon w be a mos
sm a o ha o ndus y ave age excep o a ew occasons. Thus a ew aos a e ca cu aed
n hs ana yss whch can e abou he pe o mance o o and nau a gas ndus y as a
who e.





 

 
 


  -
 9
Ne p o Ma gn 26.3% 28.0
Reu n on Fxed Asses 23.5% 2.
Reu n on Ne Wo h 20.8% 20.7
Reu n on Invesmens 26.1% !".6
1.| Ne p o ma gn e s us he amoun o sa es2 ha esu ed no ne p o o p o
ae ax. [NGC s ab e o manage 1.7% hghe ne p o ma gn as compa ed o he
ndus y whch s good o he company despe o he hgh o p ces n he yea .
2.| Reu n on xed asses3: Reu n on xed asses s ve y mpo an ao n hs pa cu a
seco because hs seco eu es a huge amoun o nvesmen n he xed asses. I
one s no ab e o ge sucen eu ns on such a a ge amoun o nvesmen, he
busness can ace p ob ems. He e he eu n s ue exce en gvng a mos 23.5%
eu ns o he ndus y and a he same me [NGC s ab e o make 2% hghe eu ns
compa ed o ndus y.
3.| Reu n on ne wo h4: Ths pa cu a ao s mpo an  om nveso ¶s pon. I e s
abou he eu n whch he euy sha eho de s¶ und s gvng. The ndus y ave age
and [NGC boh he eu ns a e eua and he eu n s a so good beng c ose o 21%.
4.| Reu n on nvesmens5: Reu n on nvesmens o capa emp oyed becomes c uca
 he company s p ayng wh nanca eve age. He e [NGC has neg gb e deb n
s capa s ucu e bu ohe p vae companes have sgncan amoun o deb. I s
evden by he gu es ha ndus y ave age o eu n on nvesmens s owe han
[NGC.

1
P owess daa base s used o ex ac he daa o he company .e. [NGC as we as ohe companes n he
seco . P ease see he oonoes o u he c a caon on  eamen o seve a ems de en  om ha o acua
nanca saemens ssued by he company and he ems whch a e nc uded n ca cu aon o a pa cu a
va ab e.
2
Sa es aken o he ao ana yss s he ndus a sa es as pe p owess daabase whch akes no consde aon
on y he sa e o goods, n hs case sa e o o and nau a gas. Thus acua sa es gu e s de en n he nanca
saemens.
3
Fxed asses nc ude capa wo k n p og ess, p oducng p ope es (pa  o p an and machne y) and
exp o ao y we s-n-p og ess)
4
Ne wo h nc udes euy sha e capa , secu y p emum ese ves, capa and nvesmen and ohe ese ves,
gene a ese ves, and ba ance o p o and oss accoun. Msce aneous expenses o he exen no w en o a e
deduced  om he above sum o ge a bee pcu e o he ne wo h o euy sha e ho de s.
5
Invesmens nc ude he ne wo h and bo owngs. PBIT s used he e as he nume ao .
!
 -


 
 

!
 -
 
 9
-

Fxed Asses Tu nove 0.89 0.91
Inveno y Tu nove Rao 17.20 15.26
Toa Asse Tu nove 0.38 0.39
1.| Fxed asses u nove ao6: I e s us how many mes he oa xed asses a e
conve ed no sa es. The ao s no good as  s ess han 1 n boh he cases .e. he
ndus y ave age and [NGC sanda one. Ths acua y speaks o he nvesmen ha s
eu ed n such a busness.
2.| Inveno y u nove ao: Ths ao e s he numbe o mes nveno y s conve ed o
sa es. The gu es a e ue good beng c ose o 17 mes o he ndus y. Howeve
[NGC has  ess ha he ndus y ave age. Ths ao a so e s us ha [NGC s ab e
o se s nveno es n 23 days. The cyc e s howeve sma e o he ndus y beng
a a ound 21 days.
3.| Toa asse u nove ao: Ths ao e s us how many mes he oa asses a e
conve ed o sa es. The ao s ue ow, bu as we have a eady seen hs s he
nau e o he ndus y ha a huge amoun o nvesmen s eu ed. Thus owe ng he
u nove .


1

 
 

1

 
  
 9
-

Cu en Rao 1.2 1.0
Quck Rao 0.45 0.39
1.| Cu en ao7: The [NGC and he ndus y boh have a cu en ao eua o one.
Ths may no be good o he company and  may ace sho  e m udy c ss.
2.| The uck ao howeve s even hough esse . [NGC has compa ave y esse ao
as compa ed o ndus y ave age. Ths s no a good sgn o he company. Thus
ove a sho  e m udy poson o he company seeng hs s no good. Bu
company dea s n a o o nanca ns umens, hus  may cove s udy p ob em
 om he same.

ñ  

 - 
  
 9
-

Deb Euy 0.26 0.00
Ine es Cove age 39.91 207.31
Fnanca Leve age8 1.03 1.00

6
In hs ao he wo k n p og ess and p oducng p ope es shou d be deduced  om xed asses because hose
a e he p ope es whch have no sa ed ope ang ye. Bu due o cons ans o daa he ne xed asses s
aken. The esu s may change  p ope  eamen s gven o xed asses o hs a o.
7
In he p owess daabase cu en asses and p ovsons boh a e n aed by a huge amoun as compa ed o he
acua gu es o annua epo  he eason o whch cou d no be  aced. Thus assumng ha he sm a
 eamen wou d be o he ohe companes, he cu en ao s ca cu aed.
8
Fnanca eve age s ca cu aed by dvdng he EBIT wh he EBT.
1.| So vency aos a e no o much use o ca cu ae he e because [NGC has ve y sma
amoun o deb componen n s capa s ucu e. As  can be seen ha he e s no
nanca eve age a so.
2.| [he companes have some deb bu ha agan becomes nsgncan because o he
huge sha e o [NGC n he ma ke. I [NGC s exc uded  om he seco , he e s
acua y a deb euy ao o 1.34 and a nanca eve age o 1.11. Thus, we can say
ha [NGC s no usng a deb no s capa s ucu e and ha s why  has go
a mos same eu n on ne wo h as ha o ndus y ave age.
3.| Due o sma amoun o deb, he ne es cove age aos a e a so ue good. Thus
he e seems o be no p ob em wh he so vency o he company.

6   

R[E (20.5%)

Ne p o Asse u nove Euy


ma gn (0.28) (0.39) mu p e (1.85)

Ne p o a es Asses


(16126.32) (57530.94) (145910.77)

a es Asses Euy
(57530.94) (145910.77) (78735.4)

P

" #  
 9
R[E (20.7%)

Ne p o Asse u nove Euy


ma gn (0.26) (0.38) mu p e (2.05)

Ne p o a es Asses


( ) ( ) (   )

a es Asses Euy
( ) (   ) (97946.24)
|
P

2 #  
 
 


Usng he Du-Pon ana yss,  can be c ea y seen ha he on y p ob em s wh he asse
u nove ao. I has o be mo e so ha he R[E can be mp oved. Bu, he ndus y s
pe o mng n a sm a way;  s no o much a conce n. As he xed nvesmens eu ed n
an o ex acon and p oducon busness s ve y a ge n e ms o ses pu chased, huge p ans
seup, and pu chase, ec, and p oducon capacy s s ow, he asse u nove ao s ess.
The company shou d am a nc easng he p oducon capacy n nea e m. The capa
wo k n p og ess and p oducon p ope es a e o he same pu pose. Thus once he capacy
s mp oved an nc ease n he wea h o he company and R[E wou d be seen. Thus, wh
nc easng consumpon o o and nau a gas, he uu e p ospecs o he company seem o
be ve y good.

"  |  
|
||
These aos a e ve y mpo an  om he nveso ¶s pon o vew. Thus a ong wh ohe
hngs we need o check  he company s good o nvesmen pu pose o no.

-$
  

9

 -

Ea nng Pe Sha e 7.40
Book Va ue Pe Sha e !6.07
Dvdend Payou Rao 0.0 0.44
P ce/Ea nng Rao9 (P/E) "0.!
P ce o Book Va ue (P/B) 2."4

9
The p ce o book va ue ao and P/E ao a e ca cu aed as on 31s Ma ch 2009 usng he c osng p ce o
[NGC as on 31 s Ma ch 2009. The cu en aos a e 2.88 and 17.7 especve y.
[NGC has an EPS o "75.40 and a book va ue pe sha e o "365.07 (ma ke va ue beng a
780.2 as on 31s Ma ch 2009 c osng on NSE). The P/E ao o he company s hgh wh he
knd o eu ns  s gvng. The dvdend payou ao s 44% whch s ess han he ndus y
ave age. A so he P/B ao s 2.14 whch a e ue hgh. Thus  can be sad o be an
expensve nvesmen a p esen wh good uu e eu n p ospecs.

 
  



 9 
".|  %

 9 As  can be seen n he g aph be ow, we can c ea y see ha
he sha e p ces o [NGC have been dec nng ove pas 5 yea s. The daa aken s 
31s Ma ch 2009. The p ces have s gh y ecove ed ae ha and as a esu  he
cu en P/E ao has a so nc eased. 

9 


1600
1400
1200
1000
800 C ose P ce

600 nea (C ose P ce)
400
200
0
1-Ap -05 1-Ap -06 1-Ap -07 1-Ap -08

2.|     &


  
 

  Du ng he pas 2-3 yea s, when he


who e wo d ene ed a downu n, ene gy seco a so was no unouched by he same.
Mo eove , he se n o p ces whch wen up o $135 pe ba e and hen sudden y
dec ned o $39 pe ba e h he o companes bad y. The demand o o dec eased
d asca y du ng he s ump and so dd he p ces. Howeve , p esen condon s
bee as he economes a e ecove ng and he ndus a p oducon s akng pace
agan. 
!.| P
 
 The Company s ookng o wa d o a numbe o jon venu es.
[ne o hem s wh TERI ca ed [NGC TERI Bo-ech d. [NGC s a so sa ng
ope aona acves n Mdd e Eas and has go bg con acs n Kuwa. I has aken
up a p ojec o exp o e he su ace o K shna-Godava  basns. [NGC s a so ene ng
no enewab e ene gy deve opmen p og ams. I has a eady sa ed a 50MW Wnd
ene gy p ojec a Bhuj n Guja a. 
4.|  

 



 The Company s acve y engaged n Co po ae Soca
Responsb y and o nc ease s con buon owa ds socey. The R&D depa men
a [NGC s connuous y n wo k o p ovde g een ene gy a he bes p ces. They
have conce ns o c mae and have adoped measu es o hyd oca bon wase
dsposa s n a sae manne . The company has nc eased unds a ocaon  om 0.75%
o 2% o ne p os o va ous CSR p ojecs.

9 
 
[NGC s a pub c seco ene p se and  s he o des o ganaon n he busness o o
exp o aon n Inda. Ths gves an n nsc va ue o he company. A so, as ong as he e s o
ese ves he e w be consumpon and demand. [NGC has he a ges ma ke sha e n he
ndus y and hus  de enaes   om ohe companes n he seco . I has a bee
p oab y and so vency as compa ed o he ndus y ave age. Howeve , he conce n s ha
he p os have sa ed o dec ne o has become sab e a he cu en ae o [NGC as we
as he seco . The p o sha e o he company s dec nng n he ndus y and so s he ma ke
sha e. Thus, he e s a need o ake some co ecve measu es so ha he suaon doesn¶
become wo se  om bad. [NGC has huge amoun o nvesmens bu  s no ab e o gene ae
good sa es on he same. Thus he asse u aon and p oducon capacy has o be nc eased
n o de o nc ease he asse u nove ao. A so, he sho  e m udy poson has o be
mp oved by ehe educng he cu en ab es o by nc easng cu en asses. A so, he
company has pad s deb ove pas 5 yea s and now s no havng any eve age. I can ase
deb o nc ease EPS and subseuen y dvdend payou as we . Bu as he comng yea s, he
demand o o s gong o nc ease and so s he p ces o c ude o , he e a e good p ospecs o
gene ae bee evenues o he company.