Motilal Oswal's research report on ONGC
Upgrade ONGC to BUY…: Our upgrade is premised upon a combination of inexpensive valuations, decent volume growth pick-up, and ONGC being a beneficiary of a multi-year government focus to turn around the sector. While a peace MOU has been reached in West Asia, according to forecasts by the US EIA and our view, OECD commercial inventories of crude oil and liquid products are unlikely to normalize for CY26 and 1HCY27. This is likely to keep crude prices elevated, and we raise our Brent price assumptions to USD84.2/ USD75 per bbl for FY27/FY28 from USD75/USD65 per bbl earlier. with a TP of INR288: This revision leads to a 9%/18% rise in ONGC’s FY27/ FY28 Consol PAT.
Outlook
We model ~2.6% volume growth overall (Oil: 1.6%, Gas: 3.7%) and value the standalone business at 6.5x Dec’27 EPS, investments at a 25% discount to CMP, and OVL stake at 0.5x FY25 BVPS to arrive at our TP of INR288.
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ONGC - 0707026 - moti