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Motilal Oswal Report
Domestic brokerage firm Motilal Oswal has Upgraded Oil & Natural Gas Corporaton Ltd.'s rating to 'Buy', implying a potential upside of 22% from the current levels.
The brokerage's optimism is premised upon a combination of inexpensive valuations, decent volume growth pick-up, and ONGC being a beneficiary of a multi-year government focus to turn around the sector.
While a peace MOU has been reached in West Asia, according to forecasts by the US EIA and the brokerage's view, OECD commercial inventories of crude oil and liquid products are unlikely to normalise for CY26 and H1 CY27.
This is likely to keep crude prices elevated, and Motilal Oswal has raised its Brent price assumptions to $84.2/ $75 per bbl for FY27/FY28 from $75/$65 per bbl earlier.
With a target price of Rs 288: This revision leads to a 9%/18% rise in ONGC's FY27/ FY28 Consol PAT. The brokerage models ~2.6% volume growth overall (Oil: 1.6%, Gas: 3.7%) and value the standalone business at 6.5x Dec'27 EPS, investments at a 25% discount to current market price, and ONGC Videsh Ltd. stake at 0.5x FY25 book-value per share to arrive at a target price of Rs 28.
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