Buy Oil and Natural Gas Corporation; target of Rs 327: Geojit Financial Services

Geojit Financial Services research report on Oil and Natural Gas Corporation

Oil and Natural Gas Corporation Ltd. specialises in the exploration and production of crude oil and gas. The company has joint ventures in the oil fields in Vietnam, Norway, Egypt, Tunisia, Iran, and Australia. • In Q4FY24, standalone revenue declined 4.6% YoY to Rs. 34,637cr due to reduction in gas prices. • EBITDA surged 31.7% YoY to Rs. 19,571cr, with margin jumping to 56.5% on account of lower exploratory costs and other expenses. Reported PAT improved to Rs. 9,869cr from Rs. 528cr in Q4FY23, owing to absence of exceptional items which impacted Q4FY23 results. • The company is expected to improve its earnings performance backed by increased production at KG 98/2 field, improved realisations, monetisation of discoveries, increased capital expenditure (capex) and potential adjustment of windfall tax.

Outlook

Hence, we upgrade our rating on the stock to BUY with a revised target price of Rs. 327 based on the sumof-the-parts (SOTP) valuation.