Oil and Natural Gas Corporation 1Q: In-line EBITDA driven by higher oil prices; volumes weak

Research evidence excerpt

J P M O R G A N

Asia Pacific Equity Research

05 August 2026

Oil and Natural Gas Corporation

1Q: In-line EBITDA driven by higher oil prices; volumes

weak

Neutral

ONGC.NS, ONGC IN

Price (05 Aug 26):Rs240.20

▼Price Target (Sep-27):Rs230.00

Prior (Mar-27):Rs300.00

ONGC reported strong 1QFY27 results, with standalone EBITDA of Rs295bn up

58% YoY, but largely in line with JPMe. The oil-price-driven upside was expected,

supported by a seasonal reduction in costs. However, volumes were

disappointingly weak. Total oil production was down 6% YoY, and gas output was

down 2% YoY. ONGC stock had a sharp rally prior to the Middle East conflict, but

has underperformed the market since. Production volumes are likely to remain

under pressure; ONGC has little evident exploration upside, as well. We retain our

Neutral rating with a revised Sep-27 PT of Rs230.

Strong 1Q, as expected: ONGC reported standalone 1Q EBITDA of Rs295bn

($3.1bn), up 58%/66% YoY/QoQ. This was expected and largely in line with

JPMe. PAT of Rs170bn was 9% ahead on the back of lower depreciation

charges and higher other income. Despite the strength, 1Q EBITDA accounted

for 31% of consensus for FY27, suggesting that lower oil prices could present

downgrade risks. Volumes were weak. Crude production of 4.95MT was down

6% YoY (flat QoQ), while gas production of 4.85 BCM was down 2% YoY

(down 1% QoQ). Consolidated PAT was much weaker: PAT of Rs65bn was

down 43%/52% YoY/QoQ. Large losses at HPCL hurt earnings.

Other subs weaker QoQ: OVL’s EBITDA fell QoQ, from Rs30bn in the

March quarter to Rs20bn in 1QFY27. While revenue from operations

increased in line with oil prices, the share of profits from equity-accounted

investees fell sharply (from elevated 4Q levels). OVL’s crude production was

up 1% YoY, while gas output fell more than 6% YoY. MRPL’s headline PAT was

up materially QoQ on the back of one-time gains. OPaL’s utilization fell from

93% in 4Q to 75% in 1Q, with the company widening its losses from Rs730mn

in 4Q to a loss of Rs6.1bn in 1Q.

Key management guidance: (1) FY27 production expected at c.39 MMTOE

(38.87 MMTOE in FY26); (2) FY28 production likely at 40 MMTOE, with oil

…