ONGC Share Buyback Opens Today: Should You Tender Your Shares?

As part of the divestment plan, public sector undertaking ONGC or Oil and Natural Gas Corporation (ONGC) has opened up its buyback offer for 253 million shares that is equivalent to 1.97% of paid-up share capital or Rs. 40.22 billion for Rs. 159 per share. This is a 7% premium price in comparison to Monday's closing price at Rs. 148.

ONGC Share Buyback Opens Today: Should You Tender Your Shares?

Views on the ONGC buyback offer:

As with the case of IT major, TCS and Infosys, whose share price have inched higher more than the buyback price announced, the analysts are of the opinion that long-term investors might skip the offer and only if the investment horizon is less, then investors can tender shares to reap small gains of as much as 7%.

Outlook for ONGC stock going forward

With a favourable regime as with the falling global crude oil price, the oil exploration company is likely to garner good margins going forward providing the company's financials a boost. Also, the Q2FY 19 show for the PSU has been above street expectations, where the company in net realized US$73.1/bbl with nil subsidy burden.

On the other hand, another analyst is of the view that the valuation of the stock which has correctly sharply is attractive with P/E of 6 of FY20E EPS of Rs25. So, long term investors may remain away from the offer, while the same can be considered by short term investors.

It is to be noted that the company will be appropriating a huge amount of as much as 110 billion towards buyback and interim dividend.

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