Webinar :Don't miss the exciting session on 'Make in India: Pharmacy of the World' where top business leaders reveal how the life sciences and pharma sector can become more aatmanirbhar. Click to attend:

Buy ONGC; target of Rs 130: Emkay Global Financial

Emkay Global Financial is bullish on ONGC has recommended buy rating on the stock with a target price of Rs 130 in its research report dated February 18, 2021.

February 22, 2021 / 03:27 PM IST
  • bselive
  • nselive
Todays L/H

Emkay Global Financial's report on ONGC

We reiterate our Buy rating and OW stance on ONGC on the back of buoyant oil prices and potential overhaul in nominated block (APM) gas pricing. Brent prices have risen to USD65/bbl, driven by demand recovery, OPEC+ cuts, stimulus and extreme cold weather. Arrival of summer-driving season in US-Europe and shift to personal mobility should support oil prices further. Hence, there is upside risk to our USD55/bbl Brent assumption for FY22. Subsidy risk based on Union Budget and LPG price hikes is low in our view. ONGC management has remained upbeat on the government agreeing to remunerative gas pricing, which should at least cover the USD3.5-3.7/mmbtu cost of production. Every USD1/mmbtu rise in APM rate implies Rs2.6/sh EPS increase for the company.


We value ONGC at 4x FY23E EV/EBITDA to arrive at Rs130 TP, assuming USD2.3/2.7 APM prices for FY22/23. Under a blue sky scenario - USD60/bbl Brent, USD3.5/mmbtu gas price and KG-DWN-98/2 ramp up, FV comes above Rs170/sh.

For all recommendations report, click here

Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

Broker Research
first published: Feb 22, 2021 03:27 pm

stay updated

Get Daily News on your Browser