HSBC has lowered its target price for ONGC to ₹215 from ₹230, maintaining a “Reduce” rating, as declining production volumes continue to be a significant concern for the company. The brokerage revised its oil price assumptions downward, further impacting its valuation. While the recent removal of the windfall tax and adjustments in gas pricing policies offer some relief, their effect on ONGC’s financials has been limited, HSBC noted.
Another major factor weighing on ONGC’s prospects is its unrelated capital expenditure and weaker performance from its subsidiary businesses, which could dilute returns. Additionally, the company faces increasing competition from renewable energy sources, which adds to the pressure on its traditional oil and gas operations.
HSBC highlighted that ONGC’s ability to streamline its operational efficiencies and re-focus on its core business will be critical for improving investor sentiment. However, in the near term, the outlook remains muted due to ongoing challenges in production and profitability
