Global brokerage house HSBC said among oil & gas stocks, state-owned ONGC and Oil India's December quarter earnings surprised positively.
Earnings growth was driven by gas production & lower costs.
Current oil prices put them in a sweet spot, the brokerage said, adding rising gas production & gas prices are expected to drive earnings growth.
Hence HSBC advised buying ONGC & Oil India with a price target at Rs 180 & Rs 215 apiece, implying 31 percent and 23 percent potential upside respectively.
Oil India's third quarter profit grew by 74.5 percent year-on-year to Rs 1,233 crore and revenue increased 23.2 percent to Rs 3,514 crore. At operating level, EBITDA (earnings before interest, tax, depreciation and amortisation) during the quarter rose 24.3 percent to Rs 1,521 crore and margin expanded by 37 bps.
The performance was majorly driven by a healthy uptick in natural gas and crude oil segment, even though the performance from the LPG, pipeline and renewable energy business remained largely muted.
Oil and Natural Gas Corporation posted a 64.8 percent jump in third-quarter profit, boosted by higher revenue from offshore operations.
Its profit increased sharply to Rs 8,263 crore) in the quarter ended December 2018, from Rs 5,015 crore a year earlier and revenue from operations climbed over 20 percent to Rs 27,694 crore, while revenue from offshore operations rose 19.1 percent, ONGC said.
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