Buy Maharatna Oil & Gas PSU On 13.27% Correction, Jefferies Sees 46.7% Rally; TP Rs 420

Brokerage firm Jefferies appear bullish on Maharatna public sector undertaking (PSU) Oil And Natural Gas Corporation Ltd shares and recommended investors to buy ONGC shares with fresh target price of Rs 420 per share. Current market price of ONGC shares on BSE is Rs 286.30. Oil And Natural Gas Corporation shares corrected 13.27% in last 1-month and rose 39% in 2024 only and 115% in last 2-years. The large cap PSU has a market capitalisation of Rs 3,60,173.39 crore. Oil And Natural Gas Corporation had recommended final dividend of Rs 2.50 per equity and shares traded ex-dividend on August 23, 2024. Check key details below pertaining to ONGC:

Analysts Recommend Buy: According to the foreign brokerage firm, "Jefferies expects KG production to contribute 10% to FY26 estimated consolidated EBITDA. According to Jefferies, management is confident of ramping up production from current levels, achieving 5-6% CAGR over FY25-27, led by KG basin. Also, the PSU is committed to green energy transition as management emphasised on its net zero target of 2038. And, correction gives buying opportunity according to Jefferies analysts who stated that valuation is favorable with ONGC trading at a steeper 65% discount to Nifty compared to its Long-Term average of 50%.

According to A R Ramachandran, Independent SEBI Research Analyst, "ONGC is oversold and bearish on the Daily charts with strong resistance at 297.8. A Daily close above this resistance could lead to target of 338 in the near term. Support will be at 276.5."

ONGC Signs Non-Associated Gas deal in Azeri-Chirag-Deepwater Gunashli (ACG), Azerbaijan: According to the BSE filing dated September 21, "ONGC Videsh, together with the State Oil Company of the Azerbaijan (SOCAR), bp, MOL, INPEX, Equinor, ExxonMobil, TPAO, and ITOCHU, have signed an addendum to the existing Production Sharing Agreement (PSA) for ACG Field in the Azerbaijan sector of the Caspian Sea. The addendum amends the ACG PSA enabling the parties to progress the exploration, appraisal, development and production from the Non-Associated Natural Gas (NAG) reservoirs of the ACG field and is effective till the end of the existing ACG PSA in 2049."

The NAG resources of ACG are believed to be significant, with up to 4 trillion cubic feet (tcf) in place, added the regulatory filing.

ONGC Share Performance: ONGC shares declined over 7% in last 2-weeks, surged 52% in last 1-year, and rallied 122% in last 3-years. In last 5-years, ONGC stock gained 114%. Its market capitalisation stood at Rs 3,60,173.39 crore. The 52-week high price of Oil And Natural Gas Corporation share on BSE is Rs 344.60 per share (as on 01/08/2024) and 52-week low price is Rs 179.80 per share (as on 26/10/2023), respectively.

ONGC Stock Split History: ONGC carried out stock split once February 8, 2011. The PSU's last split the face value of its shares from Rs 10 to Rs 5 in 2011.The share quoted ex-split from February 8, 2011.

ONGC Bonus Share History: ONGC offered 3 bonus issues since October 27, 2006. The last Bonus that ONGC offered was in the ratio of 1:2 with ex-date fixed as December 15, 2016.

About: Maharatna ONGC is the largest crude oil and natural gas Company in India, contributing around 71 per cent to Indian domestic production. Crude oil is the raw material used by downstream companies like IOC, BPCL, HPCL and MRPL (Last two are subsidiaries of ONGC) to produce petroleum products like Petrol, Diesel, Kerosene, Naphtha, and Cooking Gas LPG.

Disclaimer:

The stock has been picked from the brokerage report of Jefferies and A R Ramachandran. Greynium Information Technologies, the Author, and the respective Brokerage House are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to check with certified experts before taking any investment decision.