ONGC, Oil India have more value upside, says Motilal Oswal: Check target price

Shares of ONGC and Oil India will be in focus after brokerage firm Motilal Oswal retained its 'buy' call on both the stocks with a target price of Rs 315 for ONGC and Rs 650 for Oil India. On February 21, the ONGC stocks closed in the red at Rs 273, around 1.3 percent lower. Oil India too closed in the red at Rs 586.95, 2.94 percent lower.

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According to the report,  Indian upstream stocks like ONGC and Oil India have "proven to be strong value plays in recent months" with
both ONGC and Oil India trading higher as a result of  robust production growth guidance. Over the last one year, ONGC stocks have gained around 77 percent, while Oil India has gained nearly 2x.

Analysts at Motilal Oswal expect to see another 15-20 percent of ‘value upside’ left in both these stocks as investor attention for both stocks will move to "assessing volume growth scenarios, analysing operating
costs and the strength and visibility of the exploration and development pipeline" instead of valuation. This could lead to some rerating.

While Motilal Oswal is positive on both the stocks, analysts prefer Oil India to ONGC due to its "exposure to the refining upcycle led by its stake in Numaligarh Refinery Limited, and higher core oil and gas volume growth". ONGC on the other hand, the report says has more growth challenges and is dependent on  "more offshore-oriented projects" that have a longer gestation period.

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