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Amrapali Aadya Trading
ONGC (Buy)
CMP: ₹193
Target: ₹240
ONGC ranks 23rd among leading global energy majors, is the second largest oil & gas exploration and production Company in the world, contributes around 70 per cent of the Indian domestic production. During the last quarter, ONGC has reported standalone EBITDA and PAT of ₹9,101 crore and ₹4,975 crore, respectively.
On the volume front, Q2 crude oil production stood steady at 6.39 MMT (declined by 3 per cent y-o-y, while flattish on q-o-q), while gas volume remain on the upside to 5.8 bcm (2 per cent y-o-y and 6 per cent q-o-q). Further, crude oil sales volume for Q2 stood ar 5.86MTPA, giving the impressive gas sales volume at 4.46BCM.We believe the stock price to go for re-rating post the allotment of bonus shares. Increase in crude prices is likely to improve its net realisation.
Further, the Centre’s proposition that ONGC is not liable to bear burden if crude averages below $60 a barrel has also added positivity in the stock price. We are keeping positive stance on the company on the back of new short-term subsidy sharing formula, increasing production from OVL and strong fundamentals.
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