Brokerages remain optimistic on Oil and Natural Gas Corporation (ONGC) following its Q2FY26 results, citing improving production visibility, cost optimisation efforts, and a strong pipeline of new projects. While earnings were broadly in line with expectations, analysts believe upcoming volume growth and operating efficiency will support the company’s long-term trajectory.
CLSA reiterated its high conviction outperform rating on ONGC with a target price of ₹330 per share, highlighting that Q2 EBIT and PAT were 2–4% ahead of estimates. The beat was driven by lower recouped costs, higher other income, and a lower tax rate, partially offset by forex losses and a slight miss in net revenue. The brokerage said ONGC’s management remains confident about output ramp-up, with gas production from the KG-98/2 field expected to begin scaling from Q1FY27, followed by gains from the Daman offshore field in 2026 and the Mumbai High partnership with BP Plc by early 2027.
Jefferies maintained its buy rating but cut the target price to ₹310 per share, noting that consolidated EBITDA and PAT were broadly in line with estimates. It expects production growth to resume from Q4FY26 and said ONGC remains the cheapest major global oil stock, trading at valuations that discount a crude price of about US$60 per barrel. The brokerage trimmed its FY27 and FY28 earnings estimates by 5% and 8%, respectively, but said output growth, lower opex, and steady cash flows should drive gradual margin expansion.
Nomura also retained its buy call with a revised target price of ₹270, projecting a 4% volume CAGR through FY25–28. The brokerage said management guided for annual oil production of 19.8 million tonnes in FY26 and 21 million tonnes in FY27, alongside gas production of 20 and 21.5 bcm, respectively. ONGC plans to cut operating costs by ₹50 billion and invest ₹300–350 billion annually in capex. It also aims to scale up its renewable portfolio to 10GW by 2030, while production from the Daman and DSF-II fields is expected to add around 9 mmscmd from FY26–27.
Overall, analysts expect ONGC’s next growth phase to be driven by project execution across its offshore blocks and cost rationalisation, even as near-term earnings remain sensitive to oil price movements.
Disclaimer: The views and recommendations above are those of the respective brokerages — CLSA, Jefferies, and Nomura. Business Upturn does not endorse them. Please consult a financial advisor before making investment decisions.
