Shares of energy companies – Oil and Natural Gas Corporation, Oil India, Mangalore Refinery & Petrochemicals (MRPL) and Chennai Petroleum Corporation – surged up to 10 per cent on the BSE intraday trade on Tuesday, as the crude oil prices jumped by nearly by $2 on Tuesday.  

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According to a Reuters report, the crude oil rallied for a third day on Tuesday as major producers Saudi Arabia and the United Arab Emirates looked unlikely to be able to boost output significantly while political unrest in Libya and Ecuador added to those supply concerns. 

Individually, MRPL shares gained most of all up by 10 per cent to Rs 90.35 per share, followed by Chennai Petroleum shares up by 8.5 per cent to Rs 324.6 per share on the BSE intraday on Tuesday. 

Similarly, oil exploration and production companies ONGC and Oil India each gained by around 3 and 4.5 per cent to Rs 145.7 and Rs 244.4 per share on the BSE intraday, respectively. 

At around 12:06 PM IST, Brent crude quoted at $ 112.77 a per barrel, up 1.45 per cent. US WTI Crude futures were up 1.4 per cent at $111.25. Brent futures, although, off from the 2022 highs of $139.13 a barrel, were still up a solid 44.3 per cent on a year-to-date basis. 

ONGC and Oil India have outperformed the Sensex by 20/50 per cent respectively, over the last twelve months, as Brent crude price increased by 68 per cent, HDFC Securities said and expected the outperformance to continue.   

ONGC is trading at 1.7x FY24E EV/EBITDA and 2.4x FY24E P/E, Motilal Oswal reiterating a Buy rating with a target of Rs 213 per share with a 58 per cent potential upside.   

Similarly, ICICI Securities believe steady production growth, upside risk to price, GRM estimates, and attractive valuations make Oil India’s risk-reward compelling at current levels. It reinitiates a Buy coverage with a target price of Rs 350 per share (43 per cent upside).