ONGC to buy stake in IOC at Rs. 220/share - Angel Broking

ONGC and Oil India are likely to buy a 10% stake in Indian Oil Corporation (IOC) from the government at Rs. 220/share. ONGC is likely to buy 5.0% stake which will result in cash outflow of ~Rs. 2750cr. ONGC currently holds an 8.8% stake in IOC. ONGC has a strong balance sheet with strong annual operating cash flows (FY2013 operating cash was Rs. 44,700cr). Hence, additional investments to buy stake in IOC is unlikely to have material impact on the company's financials. However, given the recent rise in the stock price of ONGC, we recommend Neutral rating on the stock.

Source : Equity Bulls

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