As per Emkay, key risks for the company are adverse oil-gas prices, policy issues, divestment, cost overruns, COVID-19-led delays and exploration failures whereas duty relief and gas pricing reforms are the key triggers.
After three consecutive days of losses, shares of Oil & Natural Gas Corporation (ONGC) jumped over 4 percent in intraday trade on July 2.
As per a PTI report, India's latest oil and gas block bid round attracted only 12 bids for the 11 areas on offer, with 10 of them getting single bids from state-owned ONGC and Oil India Ltd, upstream regulator DGH said.
The government had offered 11 blocks for exploration and production of oil and gas in the fifth bid round under the Open Acreage Licensing Policy (OLAP), bids for which closed on June 30.
According to the Directorate General of Hydrocarbons (DGH), the 11 blocks on offer got a total of 12 bids -- seven bids by Oil and Natural Gas Corp (ONGC) and four by Oil India Ltd (OIL). Invenire Petrodyne Ltd was the only private bidder.
Read more: ONGC, OIL top bidders for 11 oil, gas blocks
The state-owned company on June 30 posted a net loss of Rs 3,098 crore for the quarter ended March 31, impacted by an impairment on the slump in oil and gas prices. The company had reported a profit of Rs 4,239.50 crore in Q4 FY19 and Rs 4,226.45 crore in Q3 FY20.
CLSA has reiterated sell call on the stock with a target at Rs 55 per share.
According to CLSA, it is a big Q4 miss with EBIT was 34 percent below the estimate. However, the impairment & large forex losses were partially offset by a tax write-back.
Kotak Institutional Equities, too, has a 'sell' recommendation in the stock with a target price of Rs 60.
"We revise our consolidated EPS estimates to Rs 3.6 in FY2021 and Rs 7 in FY2022 from Rs 0.1 and Rs 7.1, respectively, factoring in higher Dated Brent crude price assumption of $40/bbl in FY2021 from US$35/bbl earlier, revised exchange rate forecasts, lower oil and gas sales volumes and other minor changes," said the brokerage.
Kotak retained 'sell' rating on the stock with an unchanged fair value of Rs 60, based on 11 times P/E multiple to FY2022E EPS plus the value of investments and write-off of acquisition cost for Area 1 block in Mozambique.
"Our reverse valuation suggests that the stock is already discounting crude price recovering to nearly US$48/bbl," Kotak said.
Brokerage firm Emkay Global has a 'buy' call on the stock with a target price of Rs 105.
"We value listed investments at a 50 percent holding company discount to the current market price. We cut FY21/22E EBITDA by 6 percent each due to lower oil prices and output, but PAT is unchanged as we build in 25.2 percent tax. We value ONGC at 4 times FY22E core EV/EBITDA (against 3 times earlier) and raise target price slightly by 4 percent to Rs 105," said the brokerage.
As per Emkay, key risks for the company are adverse oil-gas prices, policy issues, divestment, cost overruns, COVID-19-led delays and exploration failures whereas duty relief and gas pricing reforms are the key triggers.
Shares of ONGC traded 3.35 percent higher at Rs 83.20 on BSE around 12:25 hours.
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