Goal: ₹375
CMP: ₹246.40
We hosted AK Singh – Chairman and Vivek Tongaonkar – CFO within the US. ONGC has contracted BP as Technical Service Supplier on its area contributing 32/20 per cent of its crude/gasoline manufacturing. Over the 10-year interval of the contract, BP expects to extend crude oil/gasoline restoration by 44/90 per cent over ONGC’s assumed restoration estimates. This could lead to about 5 per cent annual enhance in crude and round 8 per cent annual enhance in gasoline manufacturing from the sphere FY27 onwards if BP succeeds. This might take ONGC’s manufacturing development CAGR to 10 per cent+ over FY27-30. Now we have not constructed this into our estimates.
Mumbai Excessive is geologically just like Iraq’s largest oil area – Rumaila. Forty years into Rumaila’s manufacturing, BP was inducted right into a technical companies contract in 2009. Over the following 8 years, manufacturing from the sphere rose ~40 per cent from 1.06 mbpd to 1.47 mbpd regardless of a 17 per cent pure decline charge.
We construct in 2/9 per cent CAGR in crude/gasoline manufacturing however Mumbai Excessive manufacturing development poses upside threat to our est. We venture 14 per cent EPS CAGR over FY25-27 on manufacturing development and higher pricing in gasoline. The inventory is discounting $55 crude, making R-R beneficial. Preserve Purchase with PT of ₹375.
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