ONGC’s share price was soaring on Monday morning even as the broader market was collapsing due to the rising tension in the Middle East.

What Happened: The massive surge today comes as Jefferies initiated a “buy” call on the stock with a target price of ₹390, around 47% upside from the stock’s last closing price of ₹265.70.

In its latest research note, Jefferies said that the oil major’s stock is currently trading at a steep discount to Nifty compared to its long-term average. “The current valuation does not adequately reflect its intrinsic value,” Jefferies commented.

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The brokerage firm is optimistic about ONGC’s future, anticipating strong free cash flows and a reduction in consolidated net debt over the FY24-26 period. This, in turn, is expected to drive profitable growth for the government-owned company.

However, the analyst pointed out that ONGC faces potential risks associated with sharp fluctuations in crude prices, either upward or downward. The research firm added that changes in crude and gas pricing have had a notable impact on ONGC’s profitability historically.

Price Action: ONGC’s share price was up 4.25% to trade at ₹277 in early trade on Monday.

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