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India Oil & Gas E&P – Assuming Coverage on the Inexpensive ONGC and Oil India with Buys

— Somshankar Sinha, Equity Research Analyst, India Energy

Jefferies resumes coverage of ONGC at Buy, expecting 14% FY18-21E EPS CAGR as Brent rises to US$65. The HPCL acquisition, likely EPS-accretive, is an overhang but the dilution to fair value may be modest. In any case, with the stock 20-50% cheaper than peers, there is adequate cushion, with investors underweight too. Risk/reward looks favourable, hence, with 18% potential upside to Jefferies’ Rs200 PT. With Oil India 15% cheaper than ONGC, Jefferies also resumes at Buy with a Rs465 PT. FULL REPORT