ONGC Stock Top Nifty50 Gainer, Jumps 6% – Here’s Why?


by Sandip Das on 15 April 2024,  5 min read


On April 15, 2024, the share price of Oil & Natural Gas Corporation (ONGC) surged by 6 percent intraday following a buy recommendation from Jefferies. The surge came amidst Jefferies’ bullish outlook on ONGC’s stock, citing attractive valuations and potential for significant upside.

Overview of Jefferies’ Buy Call:

Jefferies initiated a buy call on ONGC with a target price of Rs 390 per share, implying a remarkable upside of 47 percent from the current level. The firm has a bullish stance in ONGC’s current valuation relative to the benchmark Nifty index. According to Jefferies, ONGC’s stock is trading at a substantial discount to the Nifty, which is not reflective of its true potential.

Factors Driving Optimism:

Jefferies expects ONGC to exhibit robust performance in the coming years, driven by several key factors. It anticipates that ONGC will generate strong free cash flows, bolstering its financial position and enabling it to reduce consolidated net debt. This, in turn, is expected to pave the way for profitable growth over the fiscal years 2024 to 2026.

Moreover, Jefferies points out that historical reforms in crude and gas pricing have positively impacted ONGC’s profitability, surpassing decade-long averages. Looking ahead, they believe that ONGC is well-positioned to capitalize on potential reforms and market dynamics, further enhancing its earnings potential.

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Risks and Considerations:

While Jefferies is optimistic about ONGC’s prospects, they also highlight certain risks that investors should be mindful of. One significant risk factor is the volatility in crude oil prices. Given ONGC’s core operations in the oil and gas sector, fluctuations in crude prices can have a significant impact on its financial performance. Consequently, a sharp rise or fall in crude prices could pose challenges for ONGC and potentially affect its profitability. Investors need to factor in such risks while evaluating their investment decisions, it said.

Jefferies’ bullish initiation on ONGC underscores the company’s potential for substantial upside, driven by attractive valuations and promising growth prospects. It highlights ONGC’s discounted valuation relative to the broader market indices and emphasises the company’s ability to generate strong free cash flows and drive profitable growth.

At 1:38 PM, ONGC was trading at Rs 282.60 per share on NSE, up Rs 16.90 or 6.36 percent. It was also the top Nifty50 Gainer.

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Disclaimer: The information provided in this blog post is for informational purposes only and should not be construed as investment or trading advice. The author is not a financial advisor and does not have any professional qualifications in this area. The author does not guarantee the accuracy or completeness of the information provided. Any action you take based on the information in this blog post is done at your own risk. Please consult with a financial advisor before making any investment.

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