ICICI Securities gives Buy signal to ONGC, target price Rs 124.

 

ICICI Securities has given a buy rating to ONGC with a target price of RS 124. The share price moved up by 0.95% from its previous close of RS 9.35. The stock's last traded price is Rs 80.10.

Oil and Natural Gas Corporation Ltd., Incorporated in the year 1993, is a Large Cap company (having a market cap of Rs 100642.23 crore) operating in the Gas & Petroleum sector.

Financials

For the quarter ended 30-06-2020, the company reported a consolidated sales of Rs 62496.06 crore, down 40.19% from last quarter sales of Rs 104488.95 crore and down -42.93% from last year same quarter sales of Rs 109514.82 crore. The company reported a net profit after tax of Rs 1650.91 crore in the latest quarter.

Investment Rationale

Under the prevailing gas pricing formula, gas prices would be ~US$2.2/mmbtu in FY21E. Deregulation of gas prices could improve investor sentiment in ONGC and its earnings; spot LNG price, which was at US$2.1/mmbtu in Q1FY21, is over US$4/mmbtu now. The recent launch of the gas trading exchange, and the oil minister's comments on gas price deregulation, are encouraging. The brokerage has kept the earnings estimates and target price of Rs 124/share (55% upside) unchanged.

Promotors/FIIs Holdings

Promotors held a 60.4% stake in the company as of June 30, 2020, while FIIs held 8.1%, DIIs 17.4%, and public and others 14.1%.