Jefferies Starts a ‘buy’ Call on ONGC with a Projected Upside of More than 47%

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Jefferies claims that as compared to its long-term average, the ONGC stock is now selling at a more significant discount to the benchmark Nifty.
On April 15, investors will be concentrating on ONGC shares after Jefferies analysts launched a “buy” call on the counter due to appealing values. The call has a target price of Rs 390 per share, which implies a 47 percent increase from the present levels.
In contrast to its long-term average, Jefferies claims that the Oil and Natural Gas Commission (OMGC) stock is currently trading at a deeper discount to the benchmark Nifty. “The valuation does not capture adequately due to its sharp discount as against the Nifty,” according to the note.

The brokerage anticipates that over FY24–26, the state-owned business ONGC will grow profitably by producing significant free cash flows and lowering consolidated net debt. “Pricing changes for gas and crude oil in the past have affected the company’s profitability more than the previous ten-year average. In the future, we think that ONGC may be exposed to risks related to a significant increase or decrease in crude prices,” they continued.
ONGC has increased its value by more than 29% this year compared to the 50-stock Nifty’s 3.6 percent increase. On March 5, ONGC shares reached a 52-week high of Rs 284.

Prabhudas Lilladher analysts predict a little increase in ONGC’s operating profit for the March quarter, with net oil realization of $77.5 per barrel and gas realisation of $6.5 per mmBtu.
Analysts predict that in the March quarter, the company’s adjusted earnings would more than triple year over year (YoY) to Rs 796 crore, while revenues may drop by 1.6 percent YoY to Rs 3,572 crore.
Prior to this, Motilal Oswal analysts also maintained their “buy” recommendation for ONGC, with a target price of Rs 315.

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