ONGC (Oil and natural gas Corporation) shares surged over 4 per cent on NSE (National Stock Exchange), after Hong Kong based CLSA brokerege upgraded the company's rating to 'High Conviction Outperform.'
The shares of ONGC went on to touch the day high level of Rs 267.40 per share on the exchanges after hitting the opening bell at Rs 259.15 per share on the Indian bourses.
ONGC shares were trading in green, around Rs 265.40 per shareon the dalal street with jump of 4.34 per cent amounting to a Rs 11.04 per share on the indian bourses.
Jumps in volume
Increased production from the eastern offshore field is one of several volume and realization triggers for ONGC shares in 2025. Before the year ends, this will increase ONGC's domestic oil and gas production by 10 per cent and 20 per cent, respectively.
Elimination of windfall tax
Furthermore, if crude recovers, the elimination of the windfall tax might also enable ONGC to realize more than USD 75/bbl.
CLSA pointed out that ONGC shares are currently trading at a significant discount to both its own and its peers' average valuations, even in the face of several triggers. Additionally, ONGC provides an alluring dividend yield of 6 per cent.
Jeffries on ONGC
Meanwhile, earlier this month, Jefferies issued a note reiterating its buy call after observing a 58 percent increase in ONGC. Jefferies stated that it appears that the recent correction in ONGC's stock was overdone. An additional catalyst bolstering the price action is the projected increase in KG basin production in Q4FY25 and Q1FY26.
Share performance
Shares of ONGC have increased by about 17 per cent over the last 12 months, while the Nifty 50 has increased by 9.8 per cent. However, ONGC shares have dropped 25 per cent from their 52-week peak.
