Moneycontrol
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.

Hold ONGC; target of Rs 210: Axis Direct


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.


Outlook


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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