Buy this Large-Cap Maharatna Stock For 50% Potential Upside

Leading brokerage firm, HDFC Securities has given buy call to the stock of Oil and Natural Gas Corporation for a potential gain of 49.59% with a target price of Rs 184 apiece if investors buy the stock at the current market price of Rs 123. Maharatna ONGC is the largest crude oil and natural gas Company in India, contributing around 71 per cent to Indian domestic production.

Crude oil is the raw material used by downstream companies like IOC, BPCL, HPCL and MRPL (Last two are subsidiaries of ONGC) to produce petroleum products like Petrol, Diesel, Kerosene, Naphtha, and Cooking Gas LPG.

1. ONGC Stock Outlook

The current market price of ONGC is Rs 123.35 apiece and it gained 1.98% in trading today. The 52-week high is Rs 194 apiece and 52-week low is 108.50 apiece, respectively. The stock has given a return of 2.88% in one year and fell 24.05% in 5 years. Currently, the stock is trading at a discount of 57.72%.

Recently, Reliance Industries (RIL), ONGC and Oil India (OIL) stocks declined 7-15% on 1st Jul 2022 as investors took a dim view of the new levies applied on the sector. The government announced export taxes and imposed restrictions on exports of petrol, diesel and aviation turbine fuel (ATF) in order to secure supplies of these products domestically at a time when exports are becoming highly remunerative. Similarly, given the sharp surge in oil prices, the government also levied a special additional excise duty (SAED) on production of crude oil.

2. ONGC Dividend History

It has a strong dividend track record and consistently declared dividend in the last 5 years. It has declared an equity dividend of 210% or 10.5 per share for the year ending March 2022. It has been declaring dividend since year 2000.

3. ONGC Q4 Report

The company has announced a 10% surge in its consolidated net profit at Rs 12,061 crore for the quarter ending March 31, 2022 as against Rs 10,963 crore in the one year ago period. It has reported a consolidated revenue from operations at Rs 1.55 trillion for Q4 FY 2022 with a jump of 37% as against 1.14 trillion reported in Q4FY2021. It is a company with strong financials. The company's annual revenue growth of 72.09% outperformed its 3-year CAGR of 7.79%.

 

4. About ONGC

ONGC has a unique distinction of being a company with in-house service capabilities in all areas of Exploration and Production of oil & gas and related oil-field services. Winner of the Best Employer award, this public sector enterprise has a dedicated team of around 28,500 professionals who toil round the clock in challenging locations, according to its official website. It represents India's energy security through its pioneering efforts.

It has a market capitalization of Rs 155,366 crore. 

Disclaimer

The above stock was picked from the brokerage report of HDFC Securities. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article.