ONGC Stock Hits New High After A Gap Of Over 10 Years; Up 39% From June Low

3 min read Last Updated : Jul 15 2024 | 12:04 PM IST

ONGC share price record high: Shares of Oil and Natural Gas Corporation (ONGC) hit an all-time high of Rs 314.70, up 2.5 per cent on the BSE in Monday’s intraday trade, on strong growth prospects. The stock of the state-owned upstream company hit a new high after a gap of over 10 years. It surpassed its previous high of Rs 314.67 (adjusted to bonus issue), touched on June 9, 2014.

At 10:50 AM, ONGC was trading 2 per cent higher at Rs 312.55 as compared to 0.31 per cent rise in the BSE Sensex. ONGC stock has bounced back 39 per cent from a low of Rs 227 touched on June 6. In the past one year, ONGC share price has outperformed the market by surging nearly 90 per cent as against 21 per cent rally in the benchmark index.

ONGC is engaged in exploration, development, and production of crude oil, natural gas, and value added products. Maharatna ONGC is the largest crude oil and natural gas company in India, contributing around 68.2 per cent to Indian domestic production. It is also a significant producer of value-added products such as liquefied petroleum gas (LPG), superior kerosene oil (SKO), and naphtha. The company has joint ventures in the oil fields in Vietnam, Norway, Egypt, Tunisia, Iran, and Australia.

On May 29, 2024, S&P Global Ratings revised the rating outlook on ONGC to positive from stable. “The positive rating outlook on ONGC reflects the outlook on the long-term sovereign credit rating on India. It also reflects our expectation that ONGC will maintain its solid stand-alone creditworthiness, benefitting from a strong financial profile and status as a national oil company,” global rating agency had said.

Meanwhile, according to Geojit Financial Services, ONGC is expected to improve its earnings performance backed by increased production at KG 98/2 field, improved realisations, monetisation of discoveries, increased capital expenditure (capex) and potential adjustment of windfall tax.

The ramp-up of the KG 98/2 is expected to boost the company’s oil and gas production in the coming years. Additionally, higher prices for its produce will support its performance as the windfall tax does not apply to KG 98/2.

“Furthermore, monetising new discoveries, securing premium gas prices for production from the nomination field, and potential improvement in net realisations for crude oil are expected to enhance earnings. Moreover, the company’s long term strong production guidance further assures better performance in the future,” the brokerage firm said with a ‘buy’ rating on the stock and a target price of Rs 327 per share.

Analysts at ICICI Securities, too, have a ‘buy’ rating on ONGC with a target price of Rs 340 per share. Stronger cash flow and production outlook, coupled with meatier subsidiary earnings over the next two–three years and higher investment value of listed investments, may drive the uptick in the target price, the brokerage firm had said in the Q4 result update.

Going forward, the commencement of the large KG basin asset remains the key performance driver over FY25-26E – will likely fuel a material jump in production. The brokerage firm also expects conspicuous recovery in HPCL/MRPL’s earnings prospects coupled with reducing leverage in ONGC’s consolidated balance sheet.

First Published: Jul 15 2024 | 11:44 AM IST