Feb 14, 2017 06:03 PM IST | Source: Moneycontrol.com
Hold ONGC; target of Rs 210: Axis Direct
Axis Direct recommended hold rating on ONGC with a target price of Rs 210 in its research report dated February 07, 2017.
Axis Direct's research report on ONGC
ONGC’s PAT at Rs 44 bn was lower than our estimate of Rs 48 bn due to higher drywell write-offs at Rs 14 bn (Rs 8 bn expected). Total oil and gas production volumes rose impressively by 2% QoQ backed by 4% growth in gas volumes. Lifting cost, which declined by 30% over Q4FY16-Q2FY17, rose 8% QoQ.
Management expects lifting costs to remain stable at these levels, albeit higher staff costs due to wage revision pose a risk. We hike FY18E EPS by 23% and TP to Rs 210 (Rs 167 earlier) to factor in higher crude (USD 60/bl vs. USD 50/bl) and weak FX rate (INR 69.3/USD vs. 67.3). Upgrade to HOLD.
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