- Shares of oil exploration and production company
ONGC surged as much as 9% on October 5 on the back of rising gas andcrude oil prices . - The stock hits its 52-week high of ₹162.35 per share.
- The government has hiked the gas prices by 62%, which will benefit
upstream companies like ONGC, who are into the exploration and initial production stages of the oil and gas industry.
The government of India raised the price of natural gas by 62% to $2.9 per unit, the first increase in two years that will hit consumers by steeply pushing up the cost of compressed natural gas (CNG) and piped natural gas (PNG) prices.
Natural gas is used to make fertilisers and to produce electricity. It is also turned into CNG, which is then used in automobiles.
Another factor that benefited ONGC’s stock was the rise in crude oil prices that climbed to the highest levels in at least three years after the Organization of the Petroleum Exporting Countries (OPEC) — the international lobby of oil producers — hinted that it will continue on its trajectory of slow and steady increase in production. Brent crude gained over 3% to cross $81 per barrel on October 4.
Deven R Choksey, managing director MD, KR Choksey Investment Managers in an interview to The Economic Times, said the rise in gas and crude oil prices would add 15-30% earnings growth on ONGC’s books.
According to JM Financial, every 10% increase in domestic gas price has a positive impact of 3-4% on ONGC and
So far in 2021, shares of oil exploration and production company ONGC have spiralled 73%.
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