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Oil and Natural Gas Corporation (ONGC) saw a significant boost in its stock price, rising nearly 5% to INR 271.10 following positive sentiments from global brokerage Jefferies. The brokerage firm retained its bullish outlook on ONGC, citing the government’s policy continuity as a key factor in keeping the oil PSU’s profitability elevated. Jefferies believes that ONGC’s profitability is set to remain high compared to historical averages.
Jefferies expressed confidence in ONGC’s performance, highlighting upcoming triggers such as the ramp-up in KG basin production in Q3FY25 and expected profitability accretion. The target price set by Jefferies stands at INR 390, indicating a potential upside of over 50% from the previous close. The brokerage also pointed out that ONGC’s valuation is currently trading at a substantial discount compared to the Nifty’s long-term average.
The stock has shown consistent upward momentum, with a 68% rally in the past year and a 26% increase year-to-date in 2024, showcasing positive returns in most months of the current calendar year. Despite a minor dip in May, ONGC has rebounded with a 1.5% gain in June so far. The company’s 52-week high of INR 292.95 and low of INR 152.55 signal a strong performance trajectory.
In FY24, ONGC posted its highest-ever standalone net profit of INR 40,526 crore and a record consolidated net profit of INR 57,101 crore. The company’s crude oil production also experienced a quarterly surge, reaching 5.359 MMT in Q4 FY24. Following its earnings report, Nomura upgraded ONGC’s stock from ‘Reduce’ to ‘Buy’ with an increased price target of INR 290.
Furthermore, industry analysts and broking companies have been bullish on ONGC’s outlook, with consensus ratings favoring a “buy” sentiment. The stock’s recent price correction is viewed as an attractive entry point by analysts, with potential for increased value driven by favorable pricing policies and taxation structures in the oil sector. ONGC’s performance has notably outpaced the Nifty 50 index, reflecting strong investor confidence in the company’s trajectory amid positive industry trends.
