(T.E.T)
Shares of ONGC NSE 0.33 % and Oil India NSE 2.25 % are likely to benefit from the rise in oil prices, which touched a seven-year high of $89 per barrel recently. Retaining a buy rating on ONGC and Oil India, Motilal Oswal has raised target prices on both stocks to ₹210 and ₹320, respectively. The brokerage has raised FY23 and FY24 forecasts on oil prices by $5 per barrel to $70 and $65 per barrel, respectively, although it expects crude to hover in the $60-$70 per barrel range in the long run.
The brokerage has also rationalised Brent crude oil prices at $85 per barrel for the fourth quarter of FY22 and built in expectations of domestic gas prices at $6.6/USD4 mmBtu (million metric British thermal units).
Because of the change in assumptions, the brokerage has raised earnings estimates on ONGC by 27% for FY23 and by 15% for FY24. For Oil India, the brokerage has raised earnings estimates for FY23 by 14% and by 2% for FY24. Raising the target price on ONGC to ₹210 from ₹195, Motilal Oswal said ramp-up in oil and gas production has been a sore issue for investors but the rise in oil and gas prices is likely to lead to ONGC’s adjusted profit after tax for FY24 being 1.7 times that of FY21.
