ONGC shares jump over 3% as CLSA upgrades rating to ‘High Conviction Outperform’ with Rs 360 target

Shares of Oil and Natural Gas Corporation (ONGC) surged over 3% to ₹261.84 in early trade following a positive outlook from CLSA. The global brokerage upgraded ONGC to a ‘High Conviction Outperform’ rating, setting a price target of ₹360 per share, representing a potential upside of 41.2% from the current market price of ₹254.99.

Key Insights from CLSA’s Report:

• Production Growth: ONGC’s eastern offshore ramp-up is anticipated to elevate domestic oil production by 10% and gas output by 20% by the end of 2025.
• Improved Gas Realizations: New production and enhanced gas yields from well interventions are expected to boost overall realizations significantly.
• Windfall Tax Removal: The potential removal of the windfall tax could allow ONGC to achieve realizations exceeding $75/bbl if crude oil prices rebound.
• Valuation and Dividend: ONGC currently trades at a notable discount to its historical and peer averages, presenting a lucrative dividend yield of 6%.

CLSA emphasized multiple triggers, including robust production growth, better gas realizations, and potential policy changes, making ONGC an attractive investment at current valuations.