Reliance Money has recommended a hold rating on Oil and Natural Gas Corporation (ONGC) with a price target of Rs 765 in its March 16, 2009 research report.
“Oil and Natural gas Corporation (ONGC), in a recent press release has indicated that the company will not have to share any subsidy burden in Q4 FY09, which we believe is possible in view of low oil prices and absence of major under recoveries. With crude oil prices hovering at USD 45 per barrel, we expect under recovery on sale of LPG and Kerosene to get compensated by over recovery on petrol and diesel. If ONGC does not have to bear subsidy in Q4 FY09, we estimate ONGC�s standalone net profit to increase 50% on Y-o-Y basis and 59% sequentially to Rs 39.5 billion.”
“This is a very positive development for the company as far as Q4 FY09 results is concerned. At an average Nigerian Bonny Light crude oil price of USD 46 per barrel, net realization for the company for the full year FY09 will stand at USD 49 per barrel, which is in line with past trends, and substantially higher than USD 34 per barrel realized in last quarter.We recommend ‘HOLD’ on the stock with a price target of Rs 765,” says Reliance Money’s research report.
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