ONGC stock in focus as Morgan Stanley sees 31% potential upside

ONGC shares will be in focus in Friday's session (August 9) as the foreign brokerage Morgan Stanley has continued with its overweight rating on the counter with a raised target of Rs 430. This suggested target implies a potential upside of nearly 31 per cent.

In the previous day's session, the stock closed weak by 2 per cent at Rs 322.7 per share on the BSE.

The brokerage held that the top quartile dividend growth in energy globally offers a good basis for the next leg of upmove. Also, an improvement in RoCE or return on capital employed will offer a good ground. 

Recovering cash flows in international assets also is seen as a big positive. 

Key risks

The key risks, however, as assessed by the brokerage include any decline in oil price below the long term base case of $ 70 per barrel. Also, any potential reduction in government stake is also perceived as a threat.

ONGC Q! Results 

Its net profit stood at Rs 8,938.10 crore in April-June - the first quarter of the current 2024-25 fiscal year - compared to Rs 10,526.78 crore earnings in the same period last year, according to a stock exchange filing by the company.

The profit was also lower sequentially compared to Rs 9,869.37 crore in the January-March quarter.

India's largest crude oil and natural gas producer wrote off Rs 1,669.73 crore cost incurred in the unsuccessful survey and drilling of wells to find oil and gas. This compared to Rs 1,015.81 crore in April-June 2023.

Its revenue from operations rose to Rs 35,266.38 crore in the first quarter from Rs 33,814.33 crore a year back.

The higher write-off negated gains from the oil price increase.

ONGC share price performance

Shares of the company have gained over 86 per cent in the last one year.