Crude oil prices at $95? Buy ONGC, Oil India shares, say stock analysts

Iran-Israel conflict: With crude oil prices on a boil due to prevailing Iran-Israel tensions, marketmen tracking the oil & gas sector said stocks of oil producers such as ONGC and Oil India can be good buys at prevailing levels, as they do see Brent prices touching up to $95 a barrel mark in near future.

JM Financial in a fresh note maintained 'Buy' on ONGC Ltd and Oil India, as it sees them as key beneficiaries of high crude price, saying their prevailing market prices are discounting $ 65 a barrel crude realisation.

Every dollar a barrel increase in oil price boost earnings per share (EPS) of ONGC and Oil India by 1.5-2 per cent, JM estimated. 

"Further, ONGC and Oil India are likely to see earnings growth aided by robust 15 per cent and 25 per cent production growth, respectively, in the next 1-3 years," it said. 

Iranian crude shipments are material, even if they are largely to China, said ICICI Securities.  

"Brent prices of $75 a barrel are $6-7 a barrel higher against our FY26E base case of $68/bbl and hence present downside risks to OMCs EPS estimates, while upstream could see upsides. Interestingly, crude prices remain $9/bbl lower than FY22-25 average and $4/bbl below FY25 averages, suggesting adequate supplies/demand concerns are still material," ICICI Securities said. This brokerage has 'buy' ratings on both ONGC and Oil India.

Choice Broking sees crude oil prices rallying to $95 a barre level in coming weeks in case Iran Israel tensions do not ease. It, however, does not expect crude prices to sustain higher levels. 

Approximately 40 per cent of India's LNG imports and 50 per cent of its crude oil imports transits through Strait of Hormuz, making the supplies highly vulnerable to potential disruptions. That said, Choice Broking said it continue to forecast Brent at $69 by 2025 end. 

"Sectors that uses oil derivatives as inputs like aviation, paints, adhesives and tyres will be hit hard. Oil producers like ONGC and Oil India will remain resilient," said VK Vijayakumar, Chief Investment Strategist at Geojit Investments.  
 
JM Financial does not see Brent oil prices rising above $80 a barrel market. "We maintain our SELL on HPCL/IOCL and HOLD on BPCL as we believe OMCs’ risk-reward is not favourable given their aggressive capex plans and as valuations are 10-30 per cent above the historical average," JM Financial said.