CLSA has reaffirmed its ‘Outperform’ rating on Oil and Natural Gas Corporation (ONGC) with a target price of Rs 360, identifying the company as a high-conviction pick in the energy sector. ONGC’s standalone Q3 EBITDA came in 6% above estimates due to strong oil and gas sales volumes, although PAT missed forecasts by 11% due to higher recouped costs.
During its analyst meeting, ONGC management reiterated confidence in meeting production growth targets for its new fields. CLSA notes that the rising share of new well gas in ONGC’s output, along with its production enhancement contract with BP, is expected to drive growth in the coming years. However, the brokerage has cut its FY25 EPS estimates by 5%, reflecting near-term cost pressures, while maintaining a positive long-term outlook based on ONGC’s strategic initiatives and production ramp-up.
