Broker's call: ONGC

BofA-ML Neutral on ONGC

Bank of America-Merrill Lynch has retained its ‘Neutral’ rating on ONGC and set a target price of Rs 313. Upsides to ONGC’s FY13 EPS are likely from diesel price hike and favourable changes in subsidy sharing formula with upstream peer Oil India (OIL). However, there could also be downside to its FY13 EPS from oil sales volume being lower and upstream share in subsidy being higher than expected. ONGC’s recurring EPS has risen by 48% in the past two years (FY11-12). Y-o-Y decline in FY13 EPS on the high base of FY12 thus appears imminent unless Brent falls sharply to average $87/bbl or lower.