ONGC Shares Fall After Goldman Cuts Rating, Price

By Archana Chaudhary

Oct. 14 (Bloomberg) -- Oil & Natural Gas Corp., India's biggest exploration company, fell in Mumbai trading after Goldman Sachs Group Inc. downgraded the stock and cut the target price on lower oil price forecasts and poor production growth.

The explorer's shares declined 35.45 rupees, or 3.9 percent, to 881.55 rupees at the close after falling as much as 4.7 percent. The stock has lost 29 percent since the start of this year compared with a 43 percent drop in India's benchmark, 30- share Sensitive Index.

Goldman lowered Oil & Natural's rating to ``sell'' from ``neutral'' and reduced the stock's 12-month target price to 760 rupees from 1,000 rupees.

The perception that Oil & Natural will benefit from low oil prices is misguided and will change in the near term because the company's quarterly subsidy payout is expected to remain high, analysts Nilesh Banerjee, Durga Dath and Karthik Bhat wrote in a report dated today.

Crude oil prices are 3.2 percent lower than a year ago and have dropped 43 percent from the record $147.27 a barrel reached on July 11.

Oil for November delivery rose as much as $3.34, or 4.1 percent, to $84.53 a barrel in after-hours electronic trading on the New York Mercantile Exchange.

To contact the reporter on this story: Archana Chaudhary in Mumbai at achaudhary2@bloomberg.net.