Buy ONGC; target of Rs 360: Emkay

Emkay is bullish on ONGC has recommended buy rating on the stock with a target price of Rs 360 in its research report dated August 06, 2024.

Broker Research

August 08, 2024 / 15:37 IST

BUY

26 Aug, 2025 12:21

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Emkay's research report on ONGC

ONGC posted a 10% beat on Q1FY25E SA EBITDA, logging at Rs169.7bn led by lower than expected opex/levies. RPAT at Rs89.4bn saw a similar beat. Total crude production fell 1.4% YoY to 5.2mmt (inline), whereas gas output declined 4.1% YoY to 5.0bcm (1% above est.). The mgmt reiterated ramp-up in KG-98/2 peak oil and gas output by Q4FY25. DGH is working on modalities wrt premium APM gas pricing for new wells and interventions (12% of oil price), with likely positive development before year-end. We increase FY25-26E SA earnings 3% each on lower opex and raise Sep-25E TP by ~13% to Rs360/sh on roll-over to Sep-26E, besides building in lower costs and higher value of listed investments. We retain BUY, on better volume outlook, attractive valuations, and potential gas pricing triggers. Our TP implies target P/E of 8x Sep-26E consol. EPS.

Outlook

We value ONGC on DCF-based SOTP, comprising of SA, KG 98/2, and OPaL. Investments are valued at our TP/CMP, with 30% holdco discount. Key risks: Adverse oil-gas prices, policy issues, local tensions, cost overruns, outages, and dry holes.

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