For state-run Oil and Natural Gas Corp. Ltd’s (ONGC’s) investors, the fact that the stock’s valuations are inexpensive, is perhaps, the only bright spot. The shares have declined about 20% so far this fiscal year.
In comparison, the Nifty 100 index has declined at a slower rate of 5.5%. As such, the company’s valuations at around five times estimated earnings for FY20 are terribly low.
However, with prospects appearing dull, lower valuations by itself are unlikely to enthuse investors. Analysts from Emkay Global Financial Services Ltd said in a report on 13 August: “We are underweight on ONGC due to lack of triggers, weak oil output, commodity volatility and a significant divestment overhang.”
