ONGC hits 11-month high

In past two-weeks, post Q1FY17 earnings, the stock up 8.4%, as compared to 1.4% fall in the S&P BSE Sensex.

Oil and Natural Gas Corporation (ONGC) has moved higher to its 11-month high of Rs 259, up 2% on the BSE, extending its 2% gain in the past two trading sessions in an otherwise subdued market.

The stock of state-owned oil exploration is trading at its highest level since October 2015 and 3.5% away from its 52-week high of Rs 268 touched on October 12, 2015 in intra-day trade.

In past two-weeks, post April-June quarter (Q1FY17) earnings, the stock outperformed the market by gaining 8.4%, as compared to 1.4% fall in the S&P BSE Sensex.

ONGC reported a Q1FY17 EBITDA (earnings before interest, taxes, depreciation and amortization) of Rs 9,383 crore, against street  estimates of Rs 8,300-Rs 8,400 crore, due to lower expenses.

“Cost reductions, driven by lower workovers etc (which were at an elevated level in FY16), aided the earnings beat. Lower costs, particularly in a range bound crude environment, and with production growth likely muted, would be a key earnings driver, and as such these results are likely to be positive for the stock,” JP Morgan said in Q1 results update and maintain ‘neutral’ rating on the stock.

Emkay Global Financial Services maintain ‘buy’ rating on the stock with a target price of Rs 262.

“Due to implementation of Ind AS, company has reported Interest cost of Rs 290 crore and guided that it will remain the same from ensuing quarters and cess calculation is based on the Royalty rate around 16.7% instead of 20% earlier which is a bit positive for upstream companies in terms of cost is saving,” the brokerage firm said in a results update.

Till 11:08 am, a combined 2.82 million shares changed hands on the counter on the NSE and BSE.