ICICI Direct Lists 5 Quality Oil & Gas Stocks, Suggests Buy For Gains Upto 30%

Amid the government's decision to change the domestic gas pricing formula, the leading brokerage firm ICICI Direct has come up with "Buy" recommendations on 5 quality stocks from the Oil & Gas sector. These 5 stocks are Reliance Industries, Mahanagar Gas (MGL), Indraprastha Gas (IGL), Gujarat Gas, and Oil and Natural Gas Corporation (ONGC). The brokerage sees a strong upside of upto 30% in the share prices of the stocks.

Oil and Natural Gas Corporation (ONGC)

Brokerage assigns "Buy" with a target price of Rs 180/share, sees gains of up to 18% from its current market price. The stock last traded at Rs 150.60/share.

It gave 12.85% negative return in 1 year, whereas, in 3 years it gave 115.6% positive return. In the last 5 years, it gave 14.89% negative return. It is a Maharatna status PSU stock.

According to brokerage, The decline in APM prices would reduce ONGC's net realisation by US$2/mmbtu (Rs 6/scm) but would still continue to remain above historical averages.

Reliance Industries Ltd.

ICIC Direct places a "Buy" on the stock with Rs 3050 target price. Stock can fetch up to 30% return with the given target price. It last traded at Rs 2341.45/share.

In 1 year it gave 10.6% negative return, however, in 3 years it gave 117.31% positive return. It gave 157.02% negative return in 5 years.

According to brokerage, The decline in HPHT prices on Apr 1st would reduce RIL's net realisation by US$0.35/mmbtu (Rs 1/scm) but would still continue to remain above historical averages. Also, as per media sources, currently there has been no mention of giving marketing freedom to its gas pricing which was also a key recommendation made by KPC

Indraprastha Gas Ltd. (IGL)

The brokerage assigns "Buy" on IGL with target price of Rs 550/share. The stock is likely to give upto 19% return if purchased at the current market price. The stock's current market price is Rs 462.45/share.

The stock has given 20.98% positive return in 1 year, 13.71% in 3 years and 55.89% in 5 years, respectively.

According to the brokerage, Revision in gas pricing would reduce IGL's gas sourcing cost by Rs 6/scm. Assuming the company passes on this benefit to the customers, we expect their volumes to grow going ahead.

Mahanagar Gas Ltd. (MGL)

ICICI Direct assigns "Buy" on MGL with a target price of Rs 118/share. The stock is likely to give up to 20% return. The last closing price of the stock is Rs 983.10/share.

The stock gained 19.79% in 1 year, and 19.24% in 3 years, respectively. However, stocks fell 2.93% in 5 years.

According to brokerage, This new pricing would reduce MGL's gas sourcing cost by Rs 6/scm. The company has already announced a Rs 2.5/kg cut in its CNG price. Assuming the company continues to pass on this benefit to the customers, we expect their volumes to grow going ahead.

Gujarat Gas Ltd.

Brokerage revises rating on Gujarat Gas from HOLD to BUY with a target price of Rs 550/sare. It claims up to 18% upside from its current level.

It has given 11.1% negative return in 1 year. In 3 years it has given 108.66% positive return and 170.21% in 5 years, respectively.

According to brokerage, Gujarat Gas is also likely to be benefited from this price revision to a certain extent, but the company being a key beneficiary of decline in LNG prices and increase in crude prices, we expect its industrial volumes to increase going forward.

Disclaimer - The stocks have been picked from the brokerage report ICICI Direct. Greynium Information Technologies, the Author, and the respective Brokerage house are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to consult with certified experts before making any investment decision.