The Stock of Oil and Gas Development Company Limited (OGDC) has lost its vigor by 14 per cent since the start of current fiscal year, underperforming the Benchmark KSE 100 Index by 8 per cent. Apprehension regarding a potential selling by the foreign investors was the major price dampener for the stock.
This fear appeared to be strong enough to elude the positives like production growth due to on going development projects; healthy exploration stance and strong oil price outlook. We are of the view that this recent plunge in the stock price provides an attractive buying opportunity, as the stock is providing an upside potential of 17.6 per cent from our reserved based target price of Rs155.4 per share, said Shahbaz Ashraf at AHL.
Furthermore the stock is trading at FY12 dividend yield of 4.5 per cent, implying a total return of 22.1 per cent. OGDC has taken on several development projects on its existing and new fields in order to arrest the declining trend in total oil and gas production of the company. The total production addition, from these projects will be 492mmcfd gas and 7,795bopd oil to OGDC.
