Shares of a large-cap Maharatna PSU stock gained 1.8 percent on Monday’s early trades to reach a fresh 52-week high of ₹ 180.45 apiece on the National Stock Exchange (NSE). This happened after the company reported robust results for the April to June quarter of the financial year 2023-24.
According to an exchange filing, Oil & Natural Gas Corporation’s (ONGC) net profit increased by 102.6 percent to ₹ 17383 crores in the first quarter of the current financial year (Q1FY24), compared to ₹ 8,581 crores in the corresponding quarter of the previous financial year (Q1FY23). However, its gross revenue declined by 10.4 percent to 1,63,824 crores in Q1FY24, compared to ₹ 1,82,894 crores in Q1FY23, on a consolidated basis.
ONGC’s production output reduced in Q1FY24 due to the shutdown of Panna-Mukta offshore platforms for the commissioning of a new crude oil pipeline to modernise its evacuation facilities, post taking over from JV Partners; cyclone Biparjoy disrupted offshore and onshore production; and crude oil wells in southern India had to be stopped as a refinery there stopped receiving oil, following a leakage in their pipeline.
The company said that the decline is temporary. It has been taking proactive steps like advancing new well drilling activities. It said that the decline will be compensated in upcoming quarters with the commencement of additional production from new projects; especially by crude oil production commencement from KG 98/2 in Q3 2023-24.
ONGC is the largest crude oil and natural gas company in India. It is a large-cap company with a market capitalization of ₹ 2,22,923 crores. The company has a return on equity of 13.12 percent and an ideal debt-to-equity ratio of 0.51. Its shares were trading at a price-to-earnings ratio (P/E) of 6.29, which is slightly higher than the industry P/E of 0.51, indicating that the stock might be overvalued as compared to its peers.
The company’s promoters hold a 58.89 percent stake in it followed by retail investors with 13.55 percent, domestic institutions with 10.76 percent, mutual funds with 8.69 percent and foreign institutions with 8.11 percent.
Motilal Oswal had given a ‘Buy’ rating on the stock with a target price of ₹ 215.00. According to its report, the share price can reach that target within a period of 12 months. This translates to an upside of 20.15 percent, compared to its share price of ₹ 178.95 apiece at 12:25 PM on Monday.
Written by Simran Bafna
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