Oil India surges 5%, nears 52-week high in a weak market; ONGC up 2%

Oil prices rose more than $2 in early trade on Monday after Saudi Arabia raised prices sharply for is crude sales in July

Shares of Oil India surged 5 per cent to Rs 261.45 on the BSE in Monday's intra-day trade, in an otherwise weak market, as Brent crude oil prices rose after Saudi Arabia hiked prices for its crude sales in July. In comparison, the S&P BSE Sensex was down 0.45 per cent at 55,519 points at 10:09 AM.

The stock of Oil India was trading close to its 52-week high level of Rs 267.70, touched on October 1, 2021. In the past one week, it has outperformed the market by gaining 17 per cent as compared to 0.61 per cent decline in the S&P BSE Sensex.

According to a Reuters report, oil prices rose more than $2 in early trade on Monday after Saudi Arabia raised prices sharply for its crude sales in July, an indicator of how tight supply is even after OPEC+ agreed to accelerate its output increases over the next two months. CLICK HERE FOR MORE REPORT

Meanwhile, Oil India had reported strong earnings in March 2022 quarter (Q4FY22), as turnover and profit after tax (PAT) increased by 74 per cent and 92 per cent, respectively. The company reported its highest-ever quarterly net profit of Rs 1,630 crore in Q4FY22, as it received nearly $100 a barrel price for oil - produced and sold. The net profit during quarter almost doubled, as compared to Rs 847.56 crore profit in the same period last year.

Analysts at HDFC Securities believe that Oil India is a favourable 'buy' after an increase in crude price realisation and improvement in domestic gas price.

"A target price of Rs 300 is premised on increase in crude price realisation and improvement in domestic gas price realisation. Oil price realisation for FY22 improved to $76.7/bbl, vs $43/bbl in FY21, given the expected global economic rebound, post Covid-19," the brokerage firm had said in a Q4FY22 result update report.

Similarly, shares of ONGC added 2 per cent to Rs 154.30 on the BSE. HDFC Securities have a ‘buy’ recommendation on ONGC as well, with a target price of Rs 220, based on increase in crude price realisation and improvement in domestic gas price realisation.

"Management has guided for an aggressive Capex spending of Rs 310 billion on exploration activities for the next three years. Oil production for FY23/24 was guided at 21.6/21.7mmt, while gas production was guided at 24.4/26.1bcm. Management does not expect any windfall tax on the company since there are aggressive Capex plans for exploration and developmental activities. The production from KG 98/2 remains on track and is expected to peak to 12mmscmd by FY25," the brokerage firm had said in Q4 result update.