HSBC remains Neutral on ONGC

HSBC Global Research has come out with a research report on Oil & Natural Gas Corporation Limited (ONGC) after the company's recent acquisition.

ONGC Videsh (OVL), the overseas subsidiary of ONGC, has acquired Hess's 2.72% stake in large oil fields in Azerbaijan. HSBC believes the acquisition of a large producing field is a good strategic move; valuation seems justified.

HSBC remains Neutral and maintains TP of INR300. We continue to value the company at 9.3x FY14e EPS, in line with the emerging market peers. At our target price of INR300, we remain Neutral on the stock.

Key upside and downside risks are increase or decrease in oil and gas prices, share in under-recovery being different from our estimates or discovery of oil and gas asset, higher royalty or cess burden.

Source : Equity Bulls

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