Brokerage maintains ‘buy’ on ONGC, Oil India as Brent hovers at $80/bbl; Dividend pay, valuations among key reasons
₹7.4/litre, compared to the historical margin of ₹3.5/litre and gross auto-fuel integrated margin to ₹17.3/litre compared to the historical margin of ₹11.4/litre, according to the brokerage. The brokerage has maintained a ‘buy’ on Oil and Natural Gas Corporation (ONGC) at a target price of ₹225 and Oil India at a TP of ₹355) given strong dividend play of 6-8 per cent and also because current market price (CMP) is discounting ~$55-60/barrel net crude realisation.
While the TP is based on $65/bbl net crude realisation, and various changes in windfall tax suggesting that the government is fine with ONGC/Oil India making a net crude realisation of around $75/bbl. ‘’Brent crude price of $75-80/bbl is a sweet spot for ONGCand Oil India, as it improves visibility for net crude realisation of $75/bbl by eliminating the risk of ad hoc fuel subsidy burden,'' said JM Financials.Milestone Alert!
Livemint tops charts as the fastest growing news website in the world
