ONGC
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+0.85 (+0.59%)
NSE Volume
92.5L+
Broker Reports
BUY
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HOLD
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We cut our estimates for FY21/22E to factor in lower gas realization and FY20 actuals. Global crude oil and gas prices are likely to remain weak given weak global macros and rising supplies. ONGC stock has underperformed the broader index due to concerns on divestment of Government of India share and inefficient capital allocation policies. However, ONGC’s gas volume growth is likely to improve from new supplies. Reiterate BUY with a Price target of Rs96 based on 5x FY22E PER (Rs115).
BUY
We cut our estimates for FY20-22E by ~ 22% to factor in lower crude oil prices of USD62-65/bbl (USD70/bbl early), lower domestic gas prices and weak profits in MRPL and HPCL given weak refining margins. Global crude oil and gas prices are likely to remain weak given weak global macros and rising supplies. ONGC stock has underperformed the broader index due to concerns on divestment of Government of India share and inefficient capital allocation policies. However, ONGC’s volume growth is likely to improve from new supplies. Reiterate BUY with a Price target of Rs167 (Rs184 earlier).
HOLD
BUY
We tweak our estimates for FY20/21E and reiterate our positive stance on ONGC as we expect crude oil prices are likely to remain range bound at current levels, which will alleviate the need for subsidies. Also, outlook on production growth has improved. However, ONGC stock has underperformed the broader index due to concerns on divestment of Government of India share and inefficient capital allocation policies. Price target remains unchanged at Rs230.
BUY
Upstream companies were out of flavor despite realising market price for crude oil, mainly on account of the subsidy sharing with OMCs. We expect oil prices to remain muted owing to the robust supply from US Shale. This is despite production cuts from OPEC and non-OPEC countries. Thus, there is no concern over the subsidy sharing. ONGC will generate OCF yield of almost 28% and divided yield of ~6.3% over FY20/21E. The current valuations are contextually lower at 5.5x FY21 PER (ex-OVL and other investments). Our TP is Rs 184/sh (8x Jun-21E standalone core EPS (adj. for dividend income), + OVL EPS and Rs 32 from other investments).
HOLD
Valuation & Outlook: The movement in oil prices and subsidy sharing will decide ONGC’s performance, going ahead. We assume nil subsidy burden due to decline in oil prices and the new government. We model oil prices of US$65/bbl for FY20E and FY21E, given the current oil market scenario. However, due to lower growth on a sustainable basis, in spite of lower valuation, we have a HOLD rating on the stock at current levels with a target price of | 180/share (core business at | 143/share & investments at | 37share).
BUY
At attractive valuation. Concerns over lack of crude oil production growth still persist. However, we expect re-rating of ONGC as fears of subsidy burden have allayed. Adjusting for its investments (OVL+ other) the stock is trading at 6.8x FY21E standalone EPS. This indicates strong pessimism and we expect re-rating of upstream companies. Maintain BUY.
Upstream companies were out of flavour despite realizing market price for crude oil, mainly on account of lower provisioning of budgetary support in FY19 (Rs 248bn). The subsidy sharing concern allayed when the Govt. committed to settle Rs 430bn of subsidy from its own pocket. We do not foresee any subsidy sharing burden on upstream companies if crude oil prices remain below USD80/bbl. In the absence of overhang of subsidy sharing, upstream companies should be re-rated. Our TP is Rs 191/sh (8x Mar-21E standalone core EPS (adj. for dividend income), + OVL EPS and Rs 39 from other investments).
Upstream companies were out of flavour despite realizing market price for crude oil, mainly on account of lower provisioning of budgetary support in FY19 (Rs 248bn). The subsidy sharing concern allayed when the Govt. committed to settle Rs 430bn of subsidy from its own pocket. We do not foresee any subsidy sharing burden on upstream companies if crude oil prices remain below USD80/bbl. In the absence of overhang of subsidy sharing, upstream companies should be re-rated. Our TP is Rs 191/sh (8x Mar-21E standalone core EPS (adj. for dividend income), + OVL EPS and Rs 39 from other investments).
BUY
We maintain our estimates for FY20/21E as we maintain net realization at US$60/bbl. We reiterate our positive stance on ONGC as we expect crude oil prices to remain range bound at current levels, which will alleviate the need for subsidies. Also, outlook on production growth has improved. However, ONGC stock has underperformed the broader index due to concerns on divestment of Government of India share and inefficient capital allocation policies. Price target remains unchanged at Rs223.
BUY
We marginally revise our estimates to take into account (a) change in the exchange rate assumptions and (b) change in production assumptions. The stock is trading at 5.3x FY21E consolidated EPS of INR29.6. We move our valuation from Dec’20 to FY21. Valuing the company at 8x standalone EPS (excluding other income) and adding the value of investments, we reiterate our Buy rating with a target price of INR196 (earlier: INR182).
BUY
BUY
The movement in oil prices and government’s decision on subsidy sharing will decide ONGC’s performance, going ahead. We have assumed that nil subsidy burden due to decline in oil prices and increased oil subsidy allocation in budget. We model crude oil prices of US$ 65/bbl for rest of FY19E and FY20E, given the current oil market scenario. and have built in net realisations of US$ 64.5/barrel for FY20E. However, given the election year uncertainty, inspite lower valuation, we have a HOLD rating on the stock at the current levels with a target price of Rs 153/share on an EPS of Rs 22 for FY20E.
BUY
Strong shale oil supplies from USA will provide a cap on crude prices. However, the supply cut by OPEC and non-OPEC countries (excluding USA), will provide strength to crude prices in the near future. Without subsidy sharing with OMCs, the domestic E&P companies remain a play purely on crude oil prices. Our TP is Rs 184/sh (8x Dec-19E standalone + OVL EPS and Rs. 31 from investments). Maintain BUY.
BUY
We have revised crude oil production; lower by ~1.2mmt (inc. JVs) for FY20/21E, to factor in expected delays in project executions. Gas production is expected to grow ~5-6% in FY20/21. Our assumption is conservative compared to the guidance of the company. 9MFY19standaloneEBITDA/PATstandsatINR471b/INR227bup+43% YoY/+62% YoY. We estimate FY19 standalone EPS of INR22.9 and conso EPS of INR26.9 down from 29.6 to reflect adjustment in costs as well as production. We also cut FY20 and FY21 conso EPS estimates by ~10% to reflect lower estimate of production. The stock is trading at 4.4x FY20E consolidated EPS of INR30.3. We value the standalone segment at 8.0x Dec’20 EPS (adjusted for other income) of INR19.2 and add value of investments to arrive at a target price of INR182/share. Reiterate Buy.
BUY
We increase our FY19 earnings to factor in higher realization in the absence of any subsidy burden, in line with 9MFY19 trend. Nevertheless, for FY20/21E we maintain net realization at US$60/bbl, we also tweak our FY21E gas volume assumptions. We reiterate our positive stance on ONGC, following significant improvement in crude oil price and gas outlook along with better visibility on production growth. However, ONGC stock has underperformed the broader index due to concerns on subsidy payout on the back of higher crude oil prices and divestment in Government of India share. Price target remains unchanged at Rs223.
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SELL
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Price Target Potential
Brokerage
HDFC Securities
Motilal Oswal
Prabhudas Lilladher
ICICIdirect.com
Target
208
225
210
185
Potential
25.95%
43.63%
24.63%
10.61%
About
Oil & Natural Gas Corporation Ltd.
NSE: ONGC | BSE: 500312 | ISIN: INE213A01029 | Sector: Petroleum
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