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The foreign brokerage said that the Eastern Offshore Field is expected to ramp up to peak production, which will significantly boost ONGC’s domestic oil and gas output by approximately 10% and 20%, respectively, by the end of 2025.
CLSA also noted that new gas discoveries and a continued increase in gas share from well interventions are likely to enhance blended gas realisations.
Additionally, the removal of the windfall tax could enable ONGC to achieve realisations above $75 per barrel if crude oil prices recover.
Despite these multiple positive triggers, ONGC is trading at a substantial discount, compared to its historical and peer average valuations. The brokerage further said that the stock offers an attractive dividend yield of 6%.
Another brokerage house Jefferies recently noted that a likely ramp-up in KG Basin production in Q4 FY25/Q1 FY26 could be a key trigger for the stock.
According to Jefferies, the 30% correction in the stock over the past three months appears overdone. This presents a buying opportunity in stock, the brokerage said.
The brokerage also said that the recent regulatory actions bode well for improved profitability. ONGC’s oil production may decrease 4.7% year-on-year in Q3, but gas production could be flat.
For the December quarter, YES Securities expects a net crude oil realisation of $73.2 per barrel for ONGC. It sees APM gas realisation at $6.5 per mmBtu, while the volume for crude oil is expected to slip 4.7% on-year. It sees ONGC’s gas volumes to remain flat on a year-on-year basis and increase 1.2% sequentially.
As many as 20 out of the 30 analysts covering the company have a ‘Buy’ rating on the stock, five suggest a ‘hold’ and five have a ‘sell’ rating, according to data from Bloomberg.
Shares of ONGC settled 1.53% lower on Monday at ₹254.80. The stock has gained 17% in the last one year.
