MarketsMOJO Downgrades ONGC to 'Sell' After Negative Results in September 2024

Oil & Natural Gas Corporation (ONGC) has recently been downgraded to a 'Sell' by MarketsMOJO, a leading financial analysis firm. This downgrade comes after the company reported negative results in September 2024, with a significant increase in interest expenses and a decrease in profits.
According to MarketsMOJO, ONGC's interest expenses have grown at a rate of 40.90%, while its operating profit to interest ratio is at its lowest at 5.47 times. Additionally, the company's profits have fallen by -10.2% in the same period.

Technically, the stock is currently in a Mildly Bearish range, with indicators like MACD, Bollinger Band, and KST all showing bearish signals. However, there are other factors that contribute to this 'Sell' call.

One such factor is the company's low Debt to Equity ratio, which is at an average of 0.46 times. This indicates a healthy financial position and a lower risk for investors. Moreover, ONGC has a very attractive valuation with a ROCE of 16.4 and an Enterprise value to Capital Employed ratio of 1.

Despite these positive factors, the stock is currently trading at a discount compared to its historical valuations. In the past year, while the stock has generated a return of 29.24%, its profits have fallen by -17.2%. However, the company does offer a high dividend yield of 4.9% at its current price.

It is also worth noting that ONGC has a high institutional holding of 37.46%, indicating that these investors have better resources and capabilities to analyze the company's fundamentals. With a market cap of Rs 3,22,307 crore, ONGC is the second-largest company in the oil exploration/refineries sector, constituting 12.45% of the entire industry. Its annual sales of Rs 658,693.59 crore make up 19.13% of the industry.

In conclusion, while ONGC may have some positive factors, the recent downgrade by MarketsMOJO and the bearish technical indicators suggest that it may be a good time for investors to consider selling their stocks in the company.