ONGC shares become top gainer on Nifty50, close over 13% higher – Brokerage still see upside of up to 22%

Shares of state-owned oil exploration and production Oil and Natural Gas Corporation (ONGC) zoomed 15 per cent to hit a new 52-week high of Rs 189.8 on the BSE intraday on Monday. The stock closed over 13 per cent higher to Rs 187.05 per share on the BSE and was also top Nifty gainer. 

The shares of ONGC surged trade in an otherwise negative market on the back of rising crude oil prices, as it breached $130 per barrel on Monday. The ongoing tensions between Russia and Ukraine has forced the global commodity prices to gain, including crude oil and metals.  

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The stock has almost doubled from its 52-week low of Rs 97.45 touched on April 12, 2021. Besides, the company has also paid total an interim dividend of Rs 7.25 per share in FY22. 

According to Reuters report, Oil prices soared over 6 per cent, touching their highest since 2008 on Monday after the United States and European allies mulled a Russian oil import ban while delays in the potential return of Iranian crude to global markets fuelled tight supply fears.  

ONGC shares have underperformed the benchmark indices over the past three years due to a fall in domestic oil & gas production. It jumped 12 per cent, as against a 44 per cent surge in Sensex. 

During December-end quarter, ONGC’s revenue surged by 67.3 per cent Year-on-Year (YoY) amid 75 per cent increase in oil realisation. While gas realisation grew by 62 per cent to US $2.9/mmbtu (on GCV basis).  

The management said that gas output from the KG-98/2 was 0.6 mmscmd and additional 1.75 mmscmd gas is expected from March 2022, lead production growth. Gas production is expected to reach 10.4 mmscmd while oil production is estimated at 44000 bpd from KG basin in In FY24E. 

The domestic brokerage firm Motlial Oswal gives Buy recommendation for the stock with 19 per cent upside, to target price of Rs 225 per share on the BSE. Similarly, JM Financial also suggests to Buy this stock for over 22 per cent returns, with target of Rs 230 per share.