Stock picks: The share price of Oil and Natural Gas Corporation (ONGC) has increased by 94% in a year, while the share price of Oil India Ltd has increased by 263%, providing investors with multi-bagger profits.
Investor and analyst confidence in these upstream oil and gas producers’ profit growth remains high, resulting in improvements in the share prices of Oil India and ONGC.
Brent crude prices briefly fell below $80 per barrel in the early half of June, but have since recovered to above $80 per barrel. The same thing is boosting investor confidence.
According to oil analysts, Brent will likely remain above $80 per barrel. The demand-supply dynamics are projected to increase Brent crude prices, which may also have a beneficial impact on investor sentiment toward Oil India and ONGC share prices.
Brent crude prices have risen to close to $ 85 a barrel in recent weeks as OPEC (Organization of Petroleum Exporting Countries) and its allies continue with voluntary cuts and have made no indications of loosening them. Furthermore, geopolitical uncertainty in the Middle East contributes to the positive outlook.
While China’s consumption remains modest, the International Energy Agency (IEA) has maintained its global demand growth projection, according to analysts.
According to JM Financial analysts, OPEC+ output cutbacks are expected to limit global oil supply growth to 0.8mmbpd (million barrels per day) in Calendar Year 2024, resulting in a shortfall of ~0.2mmbpd. OPEC+’s pricing power is expected to keep Brent at around USD 80/bbl, which is Saudi Arabia’s fiscal break-even crude price. According to JM Financial analysts, this is a good spot for ONGC and Oil India. They argue that the current market prices for ONGC and Oil India are reflecting net crude realizations of $70 per barrel.
JM Financial has awarded ONGC and Oil India Buy ratings, indicating a solid 4-6% dividend yield and a firm production growth expectation for the next 1-3 years. Oil India is anticipated to benefit from the expansion of Numaligarh Refinery’s capacity.
Read Also: Q3 results today: ONGC, Divis Labs, Auro Pharma, MCX, and more in focus.
