Shares of Oil and Natural Gas Corporation (ONGC) remain in focus as global brokerages maintain a bullish stance on the stock, despite a sharp miss on Q4 profit due to elevated exploratory write-offs. Both CLSA and Jefferies see value in the company’s production momentum and upstream asset strength.
CLSA – High Conviction Outperform, Target Price: Rs 360
CLSA retained its high conviction outperform rating on ONGC, with a target price of Rs 360, implying a potential upside of 21 percent from the current market price of Rs 297.55 (as of May 21 close).
According to CLSA, ONGC’s standalone Q4 EBITDA of Rs 196 billion was just 3 percent below estimates, but the reported PAT of Rs 64.5 billion missed forecasts by 22 percent, largely due to a significant dry well write-off in the quarter.
However, operationally the numbers were strong — oil and gas production rose 5 percent and 4 percent YoY, respectively, to 413 kbpd and 54.4 mmscmd, driven by higher output from the KG-98/2 field. Gas price realisation also improved 4 percent QoQ, aided by a higher share of new well gas.
Jefferies – Buy, Target Price: Rs 375
Jefferies maintained a Buy rating on ONGC with a target price of Rs 375, indicating a potential 26 percent upside.
Jefferies said ONGC’s Q4 standalone EBITDA at Rs 190 billion was 9 percent higher YoY, although flat sequentially, and marginally below its estimates. PAT came in 31 percent below forecast due to higher exploratory well write-offs.
On the consolidated front, however, EBITDA was 14 percent ahead of Jefferies’ estimate, supported by a strong performance from HPCL. Consolidated PAT stood at Rs 88.6 billion, only 3 percent below estimates.
Jefferies highlighted that daily crude and gas production rose for the second straight quarter, signalling positive momentum in upstream operations.
Summary
| Brokerage | Rating | Target Price | Upside from CMP | Key View |
|---|---|---|---|---|
| CLSA | Outperform | Rs 360 | 21 percent | Strong production; PAT miss due to dry well write-off |
| Jefferies | Buy | Rs 375 | 26 percent | Solid HPCL performance; output gains sustained |
Disclaimer: This article is for informational purposes only and does not constitute investment advice. Please consult a financial advisor before making any investment decisions.
