ONGC surges 5%, stock nears 52-week high as crude oil soars to a 14-yr high

Shares of Oil and Natural Gas Corporation (ONGC) rallied 5 per cent to Rs 172.65 on the BSE in Monday’s intra-day trade in an otherwise weak market on the back of rising crude oil prices.  At 10:40 am; the stock was up 4 per cent around Rs 171.80-odd levels, as compared to a 3.2 per cent decline on the S&P BSE Sensex.

The shares of the state-owned oil exploration & production company traded close to its 52-week high of Rs 176.40 touched on February 14, 2022. The stock has zoomed over 77 per cent from its 52-week low of Rs 97.45 hit on April 12, 2021. Apart from that, so far this fiscal year FY22, the company paid total an interim dividend of Rs 7.25 per share.

Oil prices soared more than 6%, touching their highest since 2008 on Monday after the United States and European allies mulled a Russian oil import ban while delays in the potential return of Iranian crude to global markets fuelled tight supply fears, the Reuters reported. CLICK HERE FOR FULL REPORT
 
Sustained higher crude oil prices and gas realisations can result in better profitability for ONGC. The stock price of the company has underperformed the benchmark over the past three years due to a decline in domestic oil & gas production. In the past three years, the stock gained 12 per cent, as against a 44 per cent surge on the S&P BSE Sensex.

For October-December quarter (Q3FY22), ONGC’s revenue increased 67.3 per cent year-on-year (YoY) on account of 75 per cent increase in oil realisation. Also, gas realisation increased 62 per cent to US $2.9/mmbtu (on GCV basis). Profit after tax (PAT) was at Rs 8,764 crore, down 52.2 per cent sequentially as the company reported negative tax outgo in previous quarter. On Y-o-Y basis, the PAT zoomed nearly 600 per cent from Rs 1,258 crore in Q3FY21.

The management said that gas output from the KG-98/2 was 0.6 mmscmd and additional 1.75 mmscmd gas is expected from March 2022 that will lead to production growth. In FY24E, gas production is expected to reach 10.4 mmscmd while oil production is estimated at 44000 bpd from KG basin, ICICI Securities said in its result update.

ONGC

Upside Potential: 4.5%

Resistance: Rs 177 - Rs 180

The stock as expected seems on course to re-test its 52-week high of Rs 176.35 registered on February 14, 2022. As per the daily and weekly charts, the overall bias continues to remain bullish with some resistance expected around Rs 177 to Rs 180 zone.

For the up move to gain momentum, the stock needs to consistenly sustain above Rs 173.50. On the flip side, failure to sustain above Rs 173.50 on a consistent basis can trigger a minor correction towards Rs 166 to Rs 161-odd levels.

The price-to-moving average action coupled with Directional Index and Stochastic Slow continues to remain in favour of the bulls on the daily charts. The MACD (Moving Average Convergence Divergence) too has given a positive divergence.

(With inputs from Rex Cano)