New Delhi: Citi and Jefferies have maintained a Buy rating on Oil and Natural Gas Corporation (ONGC) stock. The brokerages backed the PSU stock after the Union Ministry of Petroleum and Natural Gas approved a 20 per cent premium for gas from new wells for ONGC.
The government approved a 20 per cent premium over the regulated or APM price for any natural gas that ONGC will produce from new wells.
ONGC share price target
Backing ONGC share price to increase, Jefferies gave a target price of Rs 420. Meanwhile, giving a Buy rating on the PSU stock, Citi advised the investors to set the target price at Rs 350. ONGC share price closed at Rs 330 on August 16, 2024. The PSU stock gained 20 per cent in last six months and rallied around 85 per cent in the last one year.
Govt approves 20% premium for gas from new wells for ONGC
“As per guidelines for domestic gas pricing, domestic natural gas price (APM price) was fixed at 10 per cent of the Indian crude basket price as announced by Petroleum Planning and Analysis (PPAC) on a monthly basis. It was provided in the guidelines that for the gas produced from new wells or well intervention in the nomination fields of ONGC/Oil India Limited, there would be a premium of 20% over APM prices – a total of 12% of Indian crude basket price for new gas.
“The modalities for the same had to be worked out by the Directorate General of Hydrocarbon (DGH) for approval of the Ministry of Petroleum and Natural Gas (MOPNG),” ONGC said in a statement.
In its Q1 2024-25 Results, ONGC reported 15 per cent decline in its standalone net profit at Rs 8,938 crore.
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