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Buy ONGC, target price Rs 214: ICICI Securities

ICICI Securities has buy call on Oil And Natural Gas Corporation with a target price of Rs 214. The current market price of Oil And Natural Gas Corporation Ltd. is Rs 114.45. Time period given by analyst is one year when Oil And Natural Gas Corporation Ltd. price can reach defined target.

Oil And Natural Gas Corporation Ltd., incorporated in the year 1993, is a Large Cap company (having a market cap of Rs 144044.20 Crore) operating in Gas & Petroleum sector.

Financials
For the quarter ended 31-03-2021, the company reported a Consolidated Total Income of Rs 118206.16 Crore, up 15.42 % from last quarter Total Income of Rs 102416.51 Crore and up 9.44 % from last year same quarter Total Income of Rs 108014.32 Crore. Company reported net profit after tax of Rs 10267.26 Crore in latest quarter.


Investment Rationale
Concerns of covid slowing down demand recovery and OPEC+ decision of monthly output hikes to fully unwind output cuts by Sep’22 has led to 12% fall in Brent from peak. FY22E Brent based on futures is just 1% higher than estimate of US$67.5/bbl while that for FY23E is 2% lower. UK NBP, US Henry hub (HH) and Asian spot LNG prices continue to be strong and therefore, based on latest futures we see 7-26% upside to our FY23E deepwater and APM gas price estimates. Thus, based on latest oil and gas futures, the brokerage estimates 1% upside to ONGC’s FY22E EPS and 8% to its FY23E EPS. ONGC’s share price discounts long term Brent of just US$48/bbl. It is attractive at FY22-FY23E P/E of 5.2-4.0x, EV/EBITDA of 3.7-3.2x, P/BV of 0.6-0.55x and dividend yield of 6.5-8.5%.

Promoter/FII Holdings
Promoters held 60.4 per cent stake in the company as of June 30, 2021, while FIIs held 8.1 per cent, DIIs 17.6 per cent and public and others 13.9 per cent.

(Disclaimer: Views and recommendations given in this section are the analysts’ own and do not represent those of ETMarkets.com. Please consult your financial adviser before taking any position in the stock/s mentioned.

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