BNP Paribas maintains ‘buy’ on ONGC.

ONGC 
Cmp: Rs 667.75

Target - 821

BNP Paribas has maintained a ‘buy’ rating on ONGC while lowering the price target by 30% to factor in the change in the global crude prices. “A consistent decline in oil prices means that ONGC’s net realisation declines at a price, wherein oil marketing companies break-even (around $61/bbl),” says the broking company in a report released on Tuesday. In such a scenario, shares do not act as a hedge to falling crude oil prices as the subsidy factor loses its impact at least in the near term, it adds. According to BNP Paribas’ estimates, $85-90/bbl is the optimum range for ONGC, wherein the marginal utility of each additional barrel of oil that it sells reduces. The broking firm believes that ONGC’s subsidy number for Q2FY09 was significantly high and hence, does not expect similar realisations. - ET