ONGC Gets 'Buy' Tag Despite Major Blow in Q4 Margin & Profit, 39% Upside Seen

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ONGC Gets 'Buy' Tag Despite Major Blow in Q4 Margin & Profit, 39% Upside Seen

By Malvika Gurung -- The brokerage firm Motilal Oswal (NS: MOFS ) Financial Services continues to maintain a bullish stance on the state-owned oil major ONGC (NS: ONGC ) despite lower margins and a significant blow to the company’s profit numbers in the quarter ended March 31, 2023.

The domestic brokerage has reiterated its ‘Buy’ rating on ONGC and set a target price of Rs 215/share, which is at a potential upside of 39% from the mega-cap stock’s last traded price of Rs 154.7 apiece.

ONGC is India’s largest crude oil and natural gas company. It reported a 14.57% drop in EBITDA for the March-ended quarter on a year-on-year basis and a 20% decline sequentially, lower than the company’s estimate, majorly due to higher expenses during the quarter.

Similarly, its net profit also fell 52.7% YoY and the operating margin shed 354 basis points to 14.57% in Q4 FY23, primarily driven by a provision of Rs 12,107 crore towards disputed service tax and GST on royalty and interest.

Motilal Oswal values Maharatna PSU’s standalone business at six times the estimated adjusted earnings per share (EPS) of Rs 30.4 for the financial year 2024-25.

ONGC's management is optimistic that oil production from the KG-DWN-98/2 field will start by August 2023, with an expected peak oil production at around 40-45k barrels/day as per previous guidance. The start could get delayed until October in a worst-case scenario.

Read Also: ONGC Q4 Earnings Decoded As PAT, Margins Shed While Income Rises

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  • Gursharan Singh Sodhi @Gursharan Singh Sodhi
    ongc will reach it's past glory touching 300 bucks
    Like 2

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