ONGC - Government action... Inevitable - Emkay

ONGC's consolidated production to fare better as its IOR/EOR initiatives and marginal fields development bear fruit. Expect 6% CAGR over FY12-15E to 73mtoe.

- Declining crude oil price scenario augurs well for ONGC as it has a positive impact on its oil net realization. Expect ONGC's net realizations to improve to US$55.7/bbl in FY13 and US$58.5/bbl in FY14.

- Current government finances point towards fuel price hikes as the only solution. Declining oil prices to further aid policy reforms to tackle the subsidy issue.

- Given its improving production profile, lower oil prices and possibility of price hikes, we recommend Accumulate rating for ONGC with a PT of Rs327.

Source : Equity Bulls

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