Oil and Natural Gas Corporation (ONGC) shares are in the spotlight following its Q3FY25 results, with Jefferies maintaining a Buy rating and a target price of ₹375, indicating a potential 43% upside from the current market price of ₹262.80. The brokerage highlighted a mixed performance, with strong operational numbers offset by weaker profitability due to higher costs and subsidiary underperformance.
ONGC reported a standalone EBITDA of ₹190 billion for Q3, marking an 11% year-on-year and 4% quarter-on-quarter increase, marginally ahead of Jefferies’ estimates. The positive surprise was driven by slightly higher domestic production and stable realizations. However, the company’s profit after tax (PAT) stood at ₹83 billion, reflecting a 17% YoY and 31% QoQ decline. This was 16% below Jefferies’ estimates and 17% below consensus due to higher depreciation and amortization (D&A), lower dividend income, and increased tax rates.
On a consolidated basis, ONGC’s PAT came in at ₹86 billion, which was 37% below expectations, primarily due to the weaker performance of its subsidiaries, Hindustan Petroleum Corporation Limited (HPCL) and Mangalore Refinery and Petrochemicals Limited (MRPL). Despite this, ONGC’s production from the Krishna-Godavari (KG) basin showed improvement, rising to 35 thousand barrels per day (kbpd), signaling progress in its upstream operations.
Jefferies remains optimistic about ONGC’s long-term prospects, citing the company’s production growth and potential benefits from higher commodity prices. However, near-term profitability pressures from subsidiaries and higher costs remain key risks to watch.
(Disclaimer: This article is for informational purposes only and does not constitute financial advice. Investors should consult their financial advisors before making any investment decisions.)