PSUs, or public sector undertakings, are inextricably linked to the country’s core sectors and have successfully built the country’s industrial base. The majority of these businesses are owned by the Indian government.
The dividend yield is a financial ratio that compares the amount of cash dividends paid to shareholders to the market price per share.
ONGC (Oil and Natural Gas Corporation)
Motilal Oswal set a buy target price of Rs 235 per share for ONGC, which is 12 percent higher than the current market price of Rs 210.
Motilal Oswal expects ONGC to outperform due to its low valuations and improving volume growth outlook. In addition, the company intends to increase production to 50 million metric tonnes of oil equivalent (mmtoe) by FY28 from 40mmtoe in FY23, with 23 active projects (9 infrastructure and 14 development).
Their Management expects ONGC Petro additions Limited (OPAL) to become profitable by FY25 if the government approves the use of gas from new wells.
On Wednesday, the share price of Oil and Natural Gas Corporation Ltd opened 0.7 percent down Rs 205.50 per share from its previous close of Rs 207.05 with a market capitalization of Rs 2,61,000 Crores.
ONGC has a dividend yield of 7.45 percent, a low price-to-earnings ratio of 6, and a low debt-to-equity ratio of 0.46 compared to its peers.
ONGC’s share price increased by 27 percent in the last six months and 39 percent in the last year; additionally, the company declared dividends three times last year, totaling Rs 10.25 per share, a 4.8 percent increase over the current market price of Rs 210.
Looking at their financials, their net revenue decreased by 12 percent year on year from Rs 1,68,656 crores in Q2FY23 to Rs 1,46,873 crores in Q2FY24. Furthermore, net profit grew 142.3 percent year on year, rising from Rs 6,830 crores in Q2FY23 to Rs 16,553 crores in Q2FY24.
Oil and Natural Gas Corporation Limited is a crude oil and natural gas company based in India. Exploration and Production, as well as Refining and Marketing, are the company’s business segments.
Coal India Ltd
Motilal Oswal set a buy target price for Coal India Ltd of Rs 430 per share, which is 8.8 percent higher than the current market price of Rs 395.
According to Motilal Oswal, domestic power demand is expected to grow at 1.1x GDP and generate 1,750bu of power in FY24. Coal India is our top choice because it is well-positioned to benefit from power sector growth.
Also, Coal production is expected to reach 780 million tonnes in FY24E, a 12 percent increase over the previous year, with a 6.1 percent dividend yield.
On Wednesday, the share price of Coal India Ltd opened 0.5 percent up to Rs 394.8 per share from its previous close of Rs 392.65 with a market capitalization of Rs 2,38,000 Crores.
In comparison to its peers, the company has a low price-to-earnings ratio of 8, as well as a low debt-to-equity ratio of 0.07, a return on equity of 56 percent, a return on capital employed of 71 percent, and a net profit margin of 14 percent with a dividend yield of 11.35 percent.
Coal India’s share price has increased by 66 percent in the last six months and by 72 percent in the last year. Additionally, the company declared dividends three times last year, totaling Rs 24.5 per share, a 6.2 percent increase over the current market price of Rs 395.
Looking at their financials, their net revenue increased by 9.8 percent year on year from Rs 29,838 crores in Q2FY23 to Rs 32,776 crores in Q2FY24. In addition, net profit increased 12.7 percent year on year, from Rs 6,044 crores in Q2FY23 to Rs 6,814 crores in Q2FY24.
Coal India Ltd is primarily involved in the mining and production of coal, as well as the operation of coal washeries. The company’s main customers are the power and steel industries. Other industries’ customers include cement, fertilizers, brick kilns, and so on.
Written by Sriram KV
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