CLSA retains buy on GAIL, sell rating on ONGC

Mumbai: CLSA has retained buy rating on GAILNSE 0.88 % and sell rating on Oil & Natural Gas Ciro as they believe volume growth, earnings surprise potential and return ratios are better for GAIL. The foreign brokerage has a target price of Rs 125 on GAIL and a target price of Rs 55 on ONGC. ET takes a look at reasons behind CLSA’s ‘sell ONGCNSE -0.24 %, buy GAIL’ recommendation:

Crude oil price: According to CLSA, both CLSA and GAIL are positively leveraged to the crude price but ONGC is pricing in an over $50 per barrel brent price even as futures suggest a sub-$45 per barrel price for the next two years. GAIL offers a 20% upside at a spot Brent of $41 per barrel.