Oil and Natural Gas Corporation Limited (ONGC): Comprehensive Stock Analysis Report | Scrolls
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- Sep 1
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by KarNivesh | 1 September, 2025
Oil and Natural Gas Corporation Limited (ONGC), India’s flagship upstream energy company, stands at the center of the nation’s energy security story. Despite short-term challenges like volatile oil prices and declining production, ONGC offers investors a strong long-term value proposition.
Company Overview
ONGC is India’s largest government-owned oil and gas exploration and production company, contributing nearly 70% of domestic crude oil and 84% of natural gas output. With operations across 26 sedimentary basins and a global presence in 15 countries through ONGC Videsh, it has built a robust portfolio. The company holds Maharatna status since 2010 and manages over 11,000 km of pipelines and 230 rigs.
Financial Performance
For FY2025, ONGC reported revenue of ₹1,37,846 crores with net profit at ₹35,610 crores, down 12% year-on-year. Earnings per share fell to ₹28.31 from ₹32.21. In Q1 FY2026, consolidated net profit rose 18.2% to ₹11,554 crores, though standalone profit dipped 10.2% due to weaker crude realizations.
The company realized an average crude price of ₹5,489 per barrel (converted from $66.13), marking a 20% drop from the previous year. Despite this, ONGC maintains strong fundamentals with EBITDA margins of 28%, ROCE at 16.13%, and minimal debt (D/E ratio 0.03). Dividend yield remains attractive at 5.24%, with FY2025 dividend at ₹12.25 per share.
Production and Operations
In FY2025, crude oil production grew 0.9% to 18.56 million tonnes, reversing nearly a decade of decline, while natural gas output dipped slightly to 19.65 BCM. However, total production, including joint ventures, continues to decline due to aging fields. Proven reserves also fell from 596.85 MMtoe to 525.92 MMtoe.
To counter this, ONGC drilled 578 wells in FY2025, the highest in 35 years, and made nine new hydrocarbon discoveries. Capital expenditure hit a record ₹62,057 crores, with 21 major projects underway worth ₹65,389 crores.
Valuation and Peer Comparison
ONGC trades at a P/E ratio of 8.24, well below the sector average of 50.85 and global peers at 14.6. The price-to-book ratio of 0.91 suggests undervaluation. Its dividend yield of 5.24% is higher than peers like Indian Oil (2.19%) and Reliance (0.41%).
Currently, ONGC shares trade at ₹236.26, down from a 52-week high of ₹331.95. The consensus analyst target of ₹275.30 indicates about 16% upside.
Strategic Growth
ONGC is pivoting to renewable energy, targeting 10 GW capacity by 2030 with planned investments of ₹40,000 crores. Recent acquisitions include PTC Energy Ltd for ₹925 crores (adding 288 MW wind capacity) and a stake in Ayana Renewable Power worth ₹1,91,000 crores (converted from $2.3 billion).
It also expects production boosts from its BP partnership, aiming for a 40% rise in oil and 80% in gas output from Mumbai High fields.
Risks and Outlook
Key risks include production decline in mature fields, sensitivity to oil prices (earnings weaken if Brent drops below ₹6,225 per barrel or $75), and heavy capital needs for decarbonization (₹2 trillion by 2050).
Despite risks, ONGC’s strong balance sheet, government backing, and shift toward renewables make it a BUY recommendation. Analysts see an 18% upside with a target price of ₹280 over the next 12–18 months.
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