ONGC shares extend gains to hit fresh record high; is more steam left?

Shares of Oil and Natural Gas Corporation (ONGC) Ltd continued their upward move for the third straight session in Tuesday's trade. The stock rose 0.97 per cent to hit a new all-time high of Rs 344.60. It was last seen trading 0.08 per cent lower at Rs 341 today. At this price, the scrip has gained 66.14 per cent on a year-to-date (YTD) basis.

During the quarter ended on June 30, 2024 (Q1 FY24), ONGC's crude oil price realisation (the price at which it sells the product) grew 8.8 per cent to $83.05 per barrel compared with $76.36 per barrel a year ago. Its revenue from operations climbed 4 per cent year-on-year (YoY) to Rs 35,266 crore.

However, the company's profit fell 15 per cent (YoY), which an analyst attributed to the government's windfall tax on petroleum crude.

"ONGC was an underperformer for the past two to three years, specifically when the government imposed a windfall tax on crude and restricted the company from seeing any incremental gain. These things are behind us as of now and the recent policy where the Centre announced higher premiums for new gas wells will allow ONGC to see higher realisations. Higher realisations will essentially support ONGC's earnings going forward. Also, the dividend yield is also in favour of the company. So, ONGC looks to be good from a long-term perspective," Binod Modi, Portfolio Manager, Sharekhan, BNP Paribas, told Business Today TV.

"Technically, ONGC looks strong on daily charts. The stock has crossed the intermediate resistance level of Rs 342. It is now eyeing at Rs 380-420 levels. The counter has potential to surprise us in the near term," said Mitesh Panchal, a Sebi-registered analyst.

Around 8.33 lakh shares changed hands on BSE at the time of writing this story. The figure was lower than the two-week average volume of 22.10 lakh shares. Turnover on the counter came at Rs 28.49 crore, commanding a market capitalisation (m-cap) of Rs 4,28,987.52 crore.

The counter was trading higher than the 5-day, 10-, 20-, 30-, 50-, 100-, 150-day and 200-day simple moving averages (SMAs). The counter's 14-day relative strength index (RSI) came at 61.79. A level below 30 is defined as oversold while a value above 70 is considered overbought.

The company's stock has a price-to-equity (P/E) ratio of 11.14 against a price-to-book (P/B) value of 1.40. Earnings per share (EPS) stood at 30.65 with a return on equity (RoE) of 12.60.

As of June 2024, the government held a 58.89 per cent stake in the oil and gas PSU.