First Read: Oil & Natural Gas Corporation "Policy reforms supportive of E&P..."

Research evidence excerpt

First Read: Oil & Natural Gas Corporation "Policy reforms supportive of E&P..."

Forecast returns

Forecast price appreciation 24.6%

Forecast dividend yield 5.7%

Forecast stock return 30.3%

Market return assumption 11.8%

Forecast excess return 18.5%

Company Description

Oil and Natural Gas Corporation (ONGC) is a Maharatna company with the government

holding a majority stake. ONGC operates along the entire hydrocarbon chain. It contributes

around 70% of India's domestic oil and gas production. ONGC's wholly-owned subsidiary,

ONGC Videsh, is India's largest international oil and gas company, participating in 41 oil and

gas projects in 20 countries. ONGC's 51% stake in Hindustan Petroleum Corporation (HPCL)

and 72% stake in Mangalore Refining and Petrochemicals (MRPL) provide it with a significant

presence in India's refining and marketing sector.

Valuation Method and Risk Statement

We value ONGC using PE and P/BV methodologies and apply the simple average of both to

arrive at our price target.

ONGC's earnings are sensitive to crude oil price volatility, the rupee/US dollar exchange rate,

net realisation for crude oil and the blended realisation on gas. ONGC may face downside

risks including: 1) bearing a higher fuel subsidy burden if oil prices rise sharply and the

government decides to intervene in deregulating transport fuel prices (in the past ONGC had

to bear a significant proportion of these losses); 2) issues associated with E&P businesses such

as high upfront costs, project delays and uncertain returns. At the same time, ONGC’s

realisations face upside risks such as: 1) reforms and deregulation of domestic gas prices; 2)

the removal of windfall taxes for domestic crude oil production.

First Read: Oil & Natural Gas Corporation 12 May 2026 ab 2