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Business News/ Markets / Stock Markets/  ONGC, Oil India share prices rise 77-146%: Should you Buy, Sell or Hold the stocks?

ONGC, Oil India share prices rise 77-146%: Should you Buy, Sell or Hold the stocks?

Stock Market Today: Oil India share price gained more than 4% in intraday trades on Thursday. ONGC, Oil India share prices already have risen 77-146% in a year. Analysts see more gains supported by rising production, stable realizations and good dividend yield.

ONGC, Oil India share prices rose up to 4% in intraday trades on Wednesday. Should you Buy, Sell or Hold?Premium
ONGC, Oil India share prices rose up to 4% in intraday trades on Wednesday. Should you Buy, Sell or Hold?

Oil India share prices gained more that 4% during intraday trades on Thursday. ONGC (Oil and Natural Gas Corporation) and Oil India Ltd share prices have risen 77-146% in a year. As the share prices scaled 52-week highs recently the same was in the back of expected rise in production as indicated by the management in their conference calls.

For ONGC while the management expects 15% growth in oil and gas production over the next three years, for Oil India the guided production,  implies a jump of 19% and 56% for gas and oil respectively over FY24 to FY26 as per Antique Stock Broking calculations.

While rising volumes are supportive both of the oil & Gas producing upsteam companies, the stable realizations outlook also bodes well.

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Analysts at Motilal Oswal Financial Services said that India upstream stocks have proven to be strong value plays in recent months, with both ONGC and Oil India trading higher led by robust production growth guidance. After a strong run up in stock prices, MOFSL still sees another 15-20% of ‘value’ upside’ left in both these stocks. Also beyond this, they believe growth prospects become paramount for a sustained re-rating.

Investor attention for both stocks could soon shift away from valuation discount (versus previous cycle) to assessing volume growth scenarios, analyzing operating costs (onshore versus offshore acreage) and the strength and visibility of the exploration and development pipeline, they added.

For Oil India while commissioning of the expanded capacity at the Numaligarh refinery (NRL) in September’25 can provide significant upside, the potential operational and financial turnaround at ONGC Videsh Limited (OVL) can be a major share price catalyst for ONGC as the Street currently ascribes no or little value to OVL, said analysts.

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Analysts at JM Financial Institutional Securities too had mainatined positive outlook. "Despite the recent rally, we maintain buy on ONGC and Oil India given strong dividend play (of 5-6%) and also because CMP is discounting $ 65 a barrel net crude realisation, said JM Financial. The outlook for oil prices as per JM Financial analysts remains firm and current prices of Brent are favorable. 

Brent crude price of $ 75-80 a barrel  is a sweet spot for ONGC and Oil India, as it improves visibility for net crude realisation of $ 75 a barrel by eliminating the risk of ad hoc fuel subsidy burden, said analysts at JM Financial

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions









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Ujjval Jauhari
Ujjval Jauhari is a deputy editor at Mint, with over a decade of experience in newspapers and digital news platforms. He is skilled in storytelling, reporting, analysing and writing about stocks, investment ideas, markets, corporates and more. He is based in New Delhi.
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Published: 22 Feb 2024, 01:08 PM IST
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