ONGC shares rally over 7% despite missing Street estimates. Should you buy, sell or hold?
ONGC rallied 8% on Wednesday to its day’s high of Rs 329.50 despite the company reporting a 15% year-on-year (YoY) fall in its Q1 net profit at Rs 8,938 crore, which was below the ETNOW poll of Rs 9,539 crore.
Revenue from operations in the same period increased 4% YoY to Rs 35,266 crore as against Rs 33,814 crore in the corresponding period of last year.
During the reporting period, the total crude oil production fell marginally to 5.23 mmt, while the same from joint ventures stood at 0.35 mmt. The total gas production during the quarter also fell by 4% to 4.86 BCM in the first quarter under review.
Here is how brokerages viewed the Q1 results of the company:
Jefferies: Buy| Target price: Rs 410
Jefferies has maintained a buy rating on ONGC and hiked the target price to Rs 410 from Rs 390.
The management reiterated its guidance of ramping up KG basin production from Q3 and achieving its peak potential by end-FY25.Final notification on premium pricing for gas from new wells in nomination fields is awaited and the valuation remains favorable.
ICICI Securities: Buy| Target price: Rs 375
ICICI Securities reiterated its buy rating on ONGC with a target price of Rs 275.
QoQ growth in EBITDA was driven by lower opex while higher depreciation, tax rate and lower other income led to earnings (QoQ) decline and miss vs the estimates. Consolidated EBITDA/PAT of Rs 22,600 crore/ 9,933 crore declined 26/30% YoY due to weaker performance by the subsidiaries’ earnings, partly offset by some strength seen in OVL earnings
