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Prabhudas Lilladher Report
We increase our earnings estimates of Oil and Natural Gas Corporation Ltd. by 35%/33% to factor rise in crude oil prices of $65/70/barrel of oil for FY22/23E.
Global crude oil prices recently increased sharply as Organisation of the Petroleum Exporting Countries cut production, while demand recovers from recent pandemic.
However as OPEC + countries increase their supplies and Iran sanctions get lifted, prices will likely come off.
The company's stock underperformed broader index due to divestment concerns of Government of India share and inefficient capital allocation policies.
However, we are positive about long term prospects given-
production improvement in new projects,
higher crude oil realisation with low cost and
attractive valuations.
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