ONGC shares rally 4% as CLSA upgrades stock to 'high conviction buy,' sees 42% upside

The shares of Oil and Natural Gas Corporation (ONGC) today, on January 7, rallied 4.3% to their day’s high of Rs 265.30 on the BSE after the global brokerage firm CLSA upgraded its rating to "High Conviction Overweight-PF," setting a target price of Rs 360.

The rating has been upgraded from a previous "Overweight-PF" rating, while the target price indicates a substantial upside potential of 42% from the previous closing price.

CLSA cites several key factors driving this bullish outlook. The brokerage anticipates multiple volume and realization triggers for ONGC in 2025. A significant contributor to increased production is expected to be the ramp-up of ONGC's eastern offshore field to peak production. This ramp-up is projected to significantly boost the company's domestic oil and gas output.


Furthermore, CLSA highlights the potential removal of the windfall tax as a key positive catalyst. The removal of this tax could allow ONGC to achieve realizations higher than $75 per barrel if crude oil prices recover. This may result in an improved profitability for the company.

Based on these positive factors, CLSA has revised its earnings per share (EPS) estimates for ONGC upwards by 2% to 8% over the period of 2025-2027. The brokerage also points out that ONGC is currently trading at a significant discount to both its historical valuations and the average valuations of its peers. This undervaluation presents an attractive investment opportunity, according to CLSA.

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Adding to the investment appeal, ONGC offers an attractive dividend yield of 6%. This provides investors with a steady income stream while they await potential price appreciation.

ONGC share price history

Shares of ONGC have increased by 22.4% in the last one year, however, have fallen by 8.1% and 8.5% in the last 6 months and 3 months respectively, according to the BSE Analytics.

ONGC share price target

According to the data available on Trendlyne, 16 out of 30 analysts recommend a ‘strong buy’ on ONGC while 4 recommend a ‘buy’ rating for the stock. Meanwhile, 6 recommend a ‘hold’ rating, with 3 and 1 analyst(s) recommending a ‘sell’ and ‘strong sell’ respectively. The average 12-month target price is Rs 311, indicating a potential upside of 18% from current levels.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)