Analysts Bullish on ONGC and Oil India as Brent Crude Holds Above $80, Delivering Multibagger Returns

Investors and analysts are optimistic about Oil and Natural Gas Corporation (ONGC) and Oil India Ltd as both companies have seen significant gains in their share prices. ONGC has surged by 94% over the past year, while Oil India’s shares have soared by 263%, delivering multibagger returns to investors.

Earnings Growth

The confidence in earnings growth for these upstream oil and gas producers remains robust, bolstering their stock prices. Brent Crude prices, which briefly dipped below $80 a barrel in early June but have since stabilized above this mark, are contributing to positive investor sentiment.

Analyst Prediction

Analysts predict that Brent Crude will likely continue to hold above $80 per barrel due to ongoing voluntary production cuts by OPEC and its allies, coupled with geopolitical tensions in the Middle East. Despite soft demand from China, the International Energy Agency (IEA) maintains its global demand growth forecast, providing further support to oil prices.

According to analysts at JM Financial, the constrained oil supply growth and strong pricing control by OPEC+ members are expected to keep Brent Crude around $80 per barrel. This price level is crucial as it aligns with the fiscal break-even point for Saudi Arabia’s crude oil exports.

Trading Prices

Moreover, ONGC and Oil India are currently trading at prices that assume crude oil realizations of $70 a barrel, indicating potential value in their current market positions. JM Financial has issued Buy ratings on both stocks, highlighting their strong dividend yields of 4-6% and promising production growth prospects over the next 1-3 years. Oil India is also set to benefit from capacity expansions at the Numaligarh Refinery.