This Stock Has An Upside Target Of 61% From Current Levels

The stock of Oil and Natural Gas Corporation Ltd. (ONGC) in early trade on June 4 hit a new 52-week high of Rs. 126.7 per share, surging over 3 percent against the previous closing price of Rs. 122.5 per share on the NSE.

On the headline indices, the scrip of oil drilling and exploration major was among the top gainers this week.

JP Morgan bullish on ONGC scrip

This is after global brokerage firm JP Morgan maintained its bullish outlook on the company, considering its favourable risk-reward ratio. In its Asia Pacific Equity Research dated June 3, 2021, JP Morgan is overweight on the scrip of ONGC and has given a price target of Rs. 190 to be achieved by December 2021

With complete pass-through of $70 per barrel, discount to brent should narrow, said JPMorgan.

" While ONGC's stock price is at the highest level since February 2020, we believe the discount to Brent prices has widened materially given the rally in crude prices. With India's retail fuel prices reflecting nearly $70/bbl Brent, we believe subsidy worries are misplaced. While on consensus earning the stock is trading at 6 xFY 23 P/E, we believe this reflects-$50/bbl oil, and on spot $70/bbl, ONGC is trading at 3x P/E, said JP Morgan.

With oil prices outlook firmly biased towards the upside, we see a large consensus earnings upgrade cycle ahead and believe the stock is positioned similarly to metals last year with pessimism on the outlook of underlying commodity (oil prices), material under-ownership and hence risk reward is attractive at current prices, it added.

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