Enam Securities has downgraded its rating on Oil and Natural Gas Corporation to sector underperformer with a target price of Rs 907 in its June 27, 2008 research report. "We feel that in a deteriorating environment of high oil price (under recoveries pegged at Rs 2.1 tn for FY09) and limited capacity of OMCs to absorb higher burden, ONGC remains vulnerable to higher subsidy share."

"We further expect that as it is unlikely that the Govt. will allow ONGC to have windfall profits in case the crude oil prices remain at USD 130/bbl+. This, along with limited production growth over last 4 years and rising operating costs pose a big threat to its earnings. We downgrade ONGC to sector Underperformer with a price target of Rs 907 per share," says Enam's research report.

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