Shares of Oil and Natural Gas Corporation Ltd (ONGC) rallied over 7% to reach an intraday high of Rs 329.65 per share on the NSE on Wednesday, August 7. This surge comes after multiple brokerage firms maintained bullish stances following the company’s first-quarter earnings report.
Brokerages on ONGC
Jefferies On ONGC
Jefferies has maintains a ‘Buy’ call on Oil and Natural Gas Corporation Ltd (ONGC) with a target price of Rs 390. According to their report, Q1 standalone EBITDA was 3% ahead of estimates, while domestic production was broadly in line with expectations.
The report adds realisations also slightly exceeded projections and Q1 PAT was in line with both estimates and consensus, despite being offset by higher depreciation, amortization, and interest expenses.
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Jefferies emphasized that growth guidance for production, particularly from the Krishna Godavari Basin, is crucial to monitor. They also noted that premium price realizations from new wells in nomination fields will be key factors to watch.
Motilal Oswal on ONGC
Motilal Oswal has reiterated a ‘BUY’ rating on Oil and Natural Gas Corporation Ltd (ONGC) with a target price of Rs 360, reflecting an 18% upside potential. According to their report, ONGC has guided for a 12% increase in crude oil production and a 27% rise in gas production over the next three years.
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This growth is expected to be driven by rising production from the KG 98/2 asset, development of the Daman upside, and monetization of stranded gas reserves.
While the volume guidance is optimistic, Motilal Oswal stresses that successful execution is crucial. Should ONGC achieve the projected volumes, there could be an upside risk to both the firm’s and the market’s earnings estimates.
Currently, ONGC is trading at 3.3x FY26E EV/EBITDA and 8.2x FY26E P/E. Motilal Oswal values the company at 8x FY26E adjusted EPS of Rs 32, adding the value of investments to reach their target price of Rs 360.
ICICI Securities on ONGC
ICICI Securities has reiterated its ‘BUY’ rating on Oil and Natural Gas Corporation Ltd (ONGC) following the company’s Q1FY25 results. ONGC reported adjusted standalone EBITDA of Rs 178.6 billion, which was a 2% decline year-on-year but a 7% increase quarter-on-quarter, and a PAT of Rs 89.4 billion, reflecting an 11% drop year-on-year and a 9% decrease quarter-on-quarter.
These results missed ICICI Securities’ estimates of Rs 174 billion for EBITDA and Rs 92.7 billion for PAT. The quarter-on-quarter EBITDA growth was driven by lower operating expenses, while higher depreciation, an increased tax rate, and lower other income contributed to the earnings decline and a shortfall compared to estimates.
Consolidated EBITDA and PAT were Rs 226 billion and Rs 99.3 billion, respectively, marking a 26% and 30% year-on-year decline due to weaker performances by subsidiaries HPCL and MRPL, partially offset by stronger OVL earnings.
Looking ahead, ICICI Securities notes that the ramp-up of the KG basin asset is crucial for production growth and earnings strength through FY25-26. The brokerage also expects a recovery in HPCL/MRPL’s earnings and a reduction in ONGC’s consolidated balance sheet leverage.
JM Financials on ONGC
JM Financials has reiterated its ‘BUY’ rating on Oil and Natural Gas Corporation Ltd (ONGC) with a target price of Rs 325. According to their report, ONGC’s standalone EBITDA for Q1FY25 was Rs 186 billion, exceeding JM Financials’ and consensus estimates by 15% and 10%, respectively.
This outperformance was attributed to a normalization of other operating expenses, which were Rs 53.1 billion compared to JM Financials’ estimate of Rs 72.4 billion. Standalone PAT was Rs 89 billion, 13% above JM Financials’ forecast but in line with consensus.
ONGC’s net crude realization, adjusted for windfall tax, was slightly lower at $73 per barrel versus JM Financials’ estimate of $74.1 per barrel, and overall gas realization was slightly reduced to $7 per mmBtu.
Crude sales volume was 3% below expectations at 4.1 million metric tons (mmt), and gas sales volume was 3.2% below expectations at 3.8 billion cubic meters (bcm).
However, revenue exceeded estimates by 3% due to a sharp reduction in profit petroleum payments to the government, largely from the ramp-up in KG DW 98/2 block output, which is expected to be in cost recovery phase for the next few years.
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Despite weak performance in OVL’s crude and gas production, PAT recovered quarter-over-quarter due to lower operating expenses. JM Financials maintains its BUY rating, citing a reasonable risk-reward profile and expectations that OPEC+ will support crude prices around $75-80 per barrel.
The reports adds that allowing ONGC and Oil India to achieve net crude realizations of approximately $75 per barrel. ONGC is projected to see 10-15% output growth with the ramp-up of the KG DW 98/2 block and continues to be a strong dividend play with yields between 4-6%.
Nuvama on ONGC
Nuvama has maintained a ‘REDUCE’ rating on Oil and Natural Gas Corporation Ltd (ONGC), citing a challenging outlook for the company. Nuvama has raised its target price for ONGC to Rs 245, reflecting a 17% increase, primarily driven by the mark-to-market (MTM) value of investments.
The brokerage notes that ONGC is in a ‘no-win’ situation: earnings are constrained by the Government of India’s windfall tax on oil prices above $75 per barrel, while below this threshold, earnings suffer due to declining realizations as global crude prices fall.
Additionally, the GoI has capped ONGC’s nomination gas price at $6.5 per mmBtu, with production increases being the only viable growth avenue.
Stock Performance In Last One Year
In terms of stock performance, ONGC shares have demonstrated positive returns across multiple time frames. Over the past month, the stock has given a commendable 9.69% return, showcasing its stability and growth potential. The last six months have seen even more impressive results, with a substantial increase of 20.67%, indicating a strong upward trend.
Year-to-date, ONGC shares have surged by 59.90%, reinforcing the stock’s positive momentum in the current fiscal year Come from Sports betting site VPbet . Looking at the broader picture, the stock has delivered an impressive return of over 89.88% in the last twelve months, emphasizing its sustained growth and attractiveness to investors.
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