ONGC share price: 5 key reasons why Jefferies expects more than 40% upside for the stock after 15% correction in a month

Stock Market Today: Oil and Natural Gas Corporation (ONGC) share pice remain in focus . While on one hand the declining Crude oil prices are sentimentally negative for the ONGC share price on the other hand the removal of windfall tax on crude oil by the government is looked at in positive light. ONGC share price has corrected more than 15% in last i month.

However Jefferies expects more than 40% upside for the ONGC share price. their price target stands at ₹420 which is more than 40% higher than the current market price of ₹294 for ONGC

Here are five reasons why Jefferies expects more than 40% upside

1. Strong Production Prospects - Production growth remains on track and guidance has been reiterated: Management as per Jefferies remains confident of ramping up production from current levels, achieving 5-6% CAGR over FY25-27, led by KG basin.

2. Higher profitability led by rising KG basin should offset higher operating expenses Management expects attractive profitability on back of higher crude realizations as the KG field production, which is not subject to Special Additional Excise Duty (SAED), The higher gas realizations which is benchmarked to HPHT gas (currently 50% premium to APM gas) and also lower statutory levies for initial years of production. Jefferies expects KG production to contribute 10% to FY26 estimated consolidated Earnings before interest, tax, depreciation and amortisation (Ebitda).

3. HPCL to cushion earnings: While the current weakness in crude prices hurts ONGC's realizations impacting earnings at a standalone level, management believes that this should be partially offset by HPCL's improved marketing profitability and hence cushion the overall impact on consolidated earnings, said Jefferies.

4. ONGC remains committed to green energy transition, said Jefferies as Management has reiterated its net zero target of 2038

5. Supportive valuations- 

Correction provides Buying opportunity feels Jefferies analysts who say that valuation remains favorable with ONGC trading at a steeper 65% discount to Nifty compared to its Long Term average of 50%

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