Motilal Oswal Recommends This Maharatna Stock For Return Up To 35%, Buy

Leading brokerage firm Motilal Oswal has recommended investors to buy ONGC with a target price of Rs 192 apiece. If you buy ONGC today at the current market price of Rs 142, you will get potential return of 35%. ONGC's 2QFY23 EBITDA was in line with our estimate at INR188.1b (+42% YoY, -27% QoQ) with oil realization at USD72/bbl (after taking the effect of windfall tax during the quarter). Crude oil and gas sales both were in line with our estimates at 4.8mmt and 4.2bcm, respectively, said Oswal.

1. ONGC Stock Outlook & Return

The current market price of ONGC is Rs 142 apiece with 52-week high at Rs 194 apiece and 52-week low at Rs 119 apiece, respectively. The company has a market capitalisation of Rs 1,79,520.58 crore. The stock has given a return of 5% in last 3-years and declined 9% in last 1-year. The stock has fallen 20% in last 5-years.

2. ONGC Fixed Record Date To Pay Interim Dividend

The board of directors of Oil and Natural Gas Corporation Ltd stated in the regulatory filing, "This is in continuation of our communication dated 25.10.2022 & 28.10.2022 w.r.t. Intimation and rescheduling of Board meeting scheduled to be held on Monday, the 14.11.2022 . It was also stated that the Board may also consider declaration of Interim Dividend, if any, for the FY 2022-23. In terms of Regulation 42 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, Tuesday, the 22.11.2022 will be the Record Date for determining eligibility of shareholders for payment of the said Interim Dividend, if any, declared by the Board of Directors."

The record date is November 22, 2022.

3. ONGC Valuation

According to Motilal Oswal, "ONGC is trading at 1.4x FY24E EV/EBITDA and 2.2x FY24E P/E. We value the company at 3.5x FY24E adj. EPS of INR43.4 and add the value of investments to arrive at our TP of INR192. Reiterate BUY with a 35% potential upside."

The management is also confident of arresting and reversing the decline in both oil and gas production in the coming three years. Peak production is also likely to be achieved at the KG basin in FY25E with gas already under production from three wells, added Oswal.

4. About ONGC

Oil & Natural Gas Corporation (ONGC) is primarily engaged in exploration, development and production of crude oil and natural gas. ONGC's crude oil production has been in the range of 54-63% of total domestic oil production in FY11-21.

ONGC also has a play on refining sector via its subsidiaries. Maharatna ONGC has a unique distinction of being a company with in-house service capabilities in all areas of Exploration and Production of oil & gas and related oil-field services.

Disclaimer

The stock has been picked from the brokerage report of Motilal Oswal. 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 check with certified experts before taking any investment decision.