ONGC shares rise 4% as Jefferies sees shares rallying up to 47%, maintains buy rating
Oil and Natural Gas Corp (ONGC) climbed as much as 3.7% on Friday to Rs 255.20 on BSE after global brokerage firm Jefferies reiterated its «buy» rating on the stock at a target price of Rs 375, reflecting significant potential upside of 47% from the current levels.
Jefferies said that the recent 30% correction in ONGC's stock price over the last three months appears unwarranted, attributing it to a 10% decline in crude oil prices. However, the brokerage firm noted that the earnings impact from this correction is minimal, with a reduction of only about 2%.
The brokerage firm pointed out key positive factors, including an improved earnings outlook for ONGC's subsidiary HPCL, which is expected to boost the company's consolidated earnings per share (EPS). Jefferies also noted favorable regulatory actions that are likely to enhance the company’s profitability going forward.
A significant catalyst for ONGC's growth is the anticipated production ramp-up in the Krishna Godavari (KG) basin during the fourth quarter of FY25 and the first quarter of FY26. Jefferies estimated that the KG basin production will contribute around 10% to ONGC's consolidated EBITDA in FY26, marking a critical driver for the stock’s future performance.
Jefferies revised its target price from Rs 410 to Rs 375, aligning with the broader correction in oil prices. Despite this, the firm sees the recent decline in ONGC's stock as a compelling buying opportunity, maintaining confidence in the company’s long-term growth prospects.
Stock Trading
Masterc
