ONGC, Oil India surge over 6% after govt hikes gas prices

Shares of government-owned oil companies ONGC and Oil India surged up to 6 per cent in Monday’s trade after the central government raised prices of locally produced gas and cut a windfall tax on domestically produced crude oil.

However, stocks of Mahanagar Gas, Gujarat Gas and Indraprastha Gas fell as much as 4 per cent.

Prices of natural gas on Friday were hiked by a steep 40 per cent to record levels, in step with the global firming up of energy rates. The rate paid for gas produced from old fields, which make up for about two-thirds of all gas produced in the country, was hiked to $8.57 per million British thermal units from the current $6.1, according to an order from the Oil Ministry's Petroleum Planning and Analysis Cell (PPAC).

Simultaneously, the price of gas from difficult and newer fields like the ones in Reliance Industries and its partner BP Plc ( British Petroleum) operated deepsea D6 block in KG basin, was hiked to $12.6 per mmBtu from $9.92, the order said.

At 12:28 pm, ONGC was trading 4 per cent higher to Rs 132. while Oil India was trading 3 per cent higher to Rs 180.

The highest target for ONGC goes up to Rs 240, according to Trendlyne data. The average estimate of Rs 171 shows an upside potential of around 29 per cent from current prices. Out of 23 analysts covering the stock, two have buy and strong sell ratings, while 12 have strong buy ratings.

While the highest target for Oil India goes up to Rs 328, the average estimate of Rs 244 shows an upside potential of around 35 per cent from current prices. Out of 14 analysts covering the stock, only one has a strong sell rating, while nine have strong buy ratings.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)