Motilal Oswal has maintained a 'Buy' rating on Oil and Natural Gas Corporation (ONGC) with a target of Rs 285 after the company reported a 57% year-on-year jump in Q2 FY27 profit. While earnings were strong, investors are watching the production volume decline and compressed profit margins. The company also announced a Rs 8 per share interim dividend with a record date of November 12, 2026.
Motilal Oswal has kept its 'Buy' rating on state-owned energy giant Oil and Natural Gas Corporation (ONGC) with a price target of Rs 285. This outlook follows the company's second-quarter results for fiscal year 2027, where strong oil realizations helped drive a significant increase in bottom-line performance despite some operational challenges.
In the second quarter, ONGC reported a standalone net profit of Rs 15,489 crore, marking a 57.3% increase compared to the same period last year. Revenue for the quarter stood at Rs 43,875 crore. Alongside these earnings, the company announced an interim dividend of Rs 8 per share. Investors looking to qualify for this dividend should note that the record date is set for November 12, 2026.
While the profit figures were strong, the results also highlighted operational pressure. Crude oil production declined by 1% compared to the previous quarter and 5% compared to the same period last year. Natural gas production also trended lower on a year-on-year basis. The company’s standalone operating margin, or EBITDA margin, saw a dip, moving to 56.7% from 61% in previous periods.
Analysts have pointed to reservoir complexities at the KG-98/2 block as a primary reason for these production volume constraints. These technical issues in key assets can complicate the company's ability to maintain or grow output levels, which is a key factor investors monitor to determine long-term revenue potential.
The brokerage's bullish outlook is largely tied to high crude oil price realizations, which reached USD 92.3 per barrel during the quarter. This helped offset the impact of lower production volumes. However, the company remains sensitive to global energy market volatility, and any significant drop in crude prices could directly impact future profitability.
Looking ahead, the primary monitorable for investors will be the company's ability to stabilize production levels at the KG-98/2 block and other key fields. Managing these operational risks will be critical to sustaining margins and meeting production targets in the coming quarters. Additionally, the financial performance of certain subsidiaries, such as OPL, which remains EBITDA-negative, will continue to be a point of interest for those tracking consolidated health.