AKD Research reiterates buy ratings for OGDC

AKD Research has just released an update on its coverage of Oil & Gas Development Company Ltd (OGDC). The research house has reiterated its Dec 24 target price to Rs. 180 per share.

Here are the key points from the report:

Investment Outlook

• AKD Research maintains a ‘BUY’ stance on OGDC with a NAV based Dec’24 target price of PkR180/share, offering a 30% upside from the last close.
• The stock is currently trading at a substantial discount to historical averages, presenting a potential investment opportunity.

Production Sustainability

• OGDC had a rewarding year in terms of production sustainability, marked by major discoveries and the completion of production revival projects.
• Significant discoveries include Toot Deep-1, Chak-5, and Kharo-1, alongside completion of projects at KPD, Pasakhi, and Nashpa 10/11.
• Future projects like Qadirpur and Khewari compression pumps are expected to further enhance production.

Leading Participation in Auctions

• OGDC remains the leading E&P company in terms of participation in auctions, securing over 50% of exploration leases on offer since FY21.
• Recent awards in Baluchistan province and increased exploration efforts reflect a positive outlook for the company.

Path to Circular Debt Resolution

• Authorities’ efforts to narrow the gap between gas cost and sale price are expected to slow down circular debt buildup by FY25.
• OGDC’s revenue collection rate in 9MFY24 stood at 71%, indicating a positive trend towards debt resolution.

Investment Perspective

• OGDC‘s resilient production profile discounted valuations, and ongoing fundamental reforms make it an attractive investment option.
• The company’s Dec’24 target price of PkR180/sh offers a 30% upside from current levels, with substantial potential for growth.

Disclaimer

The information in this article is based on research by AKD Research. All efforts have been made to ensure the data represented in this article is as per the research report. This report should not be considered investment advice. Readers are encouraged to consult a qualified financial advisor before making any investment decisions.