ONGC Stock EXPLODES: ICICI Securities Issues BUY Rating, Predicts Stunning 29% Upside!

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Updated on 13 Nov 2025, 07:34 am

ICICI Securities has released a research report on Oil and Natural Gas Corporation (ONGC), reiterating a BUY recommendation and setting a new price target of INR 320, down from INR 340. This revised target still presents a significant 29% potential upside from the current market price.

ONGC's Q2FY26 standalone adjusted EBITDA and PAT were INR 175 billion and INR 98.5 billion, respectively, showing a 3% and 18% year-over-year decline, which was slightly below ICICI Securities' estimates primarily due to lower-than-expected realization and higher operating expenses. However, the consolidated EBITDA and PAT surged by 28% and 5% year-over-year to INR 274.2 billion and INR 107.9 billion, respectively, indicating strong overall group performance.

The company's oil and gas output remained flat year-over-year at 10.2 million tonnes. Future growth is anticipated from projects like the KG basin, which is expected to reach approximately 10 million standard cubic meters per day (mmscmd) by FY27, along with Daman upside and DSF II production. These could boost the share of Net Worth Gas (NWG) to 35% in 3-4 years from the current 14%, potentially improving gas realization even as oil realization is projected between USD 64-66/bbl, lower than the previous USD 68-74/bbl.

ICICI Securities has reduced its EPS estimates for FY26, FY27, and FY28 by 7.5%, 7.8%, and 11.4% respectively, factoring in a slower volume ramp-up and lower long-term crude oil realization, partly offset by improved outlooks for Hindustan Petroleum Corporation Limited (HPCL) and Mangalore Refinery and Petrochemicals Limited (MRPL). Despite these adjustments, the firm views ONGC's current valuations – at 5.7x FY28E PER, 2.6x EV/EBITDA, and 0.7x P/BV – as attractive. These valuations do not adequately reflect the expected 6% CAGR in consolidated EPS over FY26-28E, a dividend yield of 5-6%, and robust RoE/ROCE projections of 12.8-13.2% in FY28E.

Impact This report is likely to positively influence investor sentiment towards ONGC, potentially driving its stock price higher given the BUY recommendation and significant upside potential highlighted. It also provides a clear outlook on the company's growth prospects and valuation, which are key factors for stock market investors. The news directly impacts the Indian stock market, specifically the energy sector. Rating: 7/10

Terms Used: EBITDA: Earnings Before Interest, Taxes, Depreciation, and Amortization, a measure of operational profitability. PAT: Profit After Tax, the net profit remaining after all expenses and taxes. YoY: Year-over-Year, comparing a period to the same period in the previous year. INR: Indian Rupee, the currency of India. mt: Metric Tonne, a unit of weight. mmscmd: Million Standard Cubic Meters per day, a unit for measuring natural gas flow rate. NWG: Net Worth Gas. In this context, it refers to a segment or category of natural gas production or sales that contributes to the company's overall value realization. FY27: Fiscal Year 2027 (typically April 1, 2026, to March 31, 2027). OVL: ONGC Videsh Limited, ONGC's subsidiary for international operations. HPCL: Hindustan Petroleum Corporation Limited, a major oil and gas company. MRPL: Mangalore Refinery and Petrochemicals Limited, a subsidiary of ONGC. EPS: Earnings Per Share, a company's profit allocated to each outstanding share of common stock. PER: Price-to-Earnings Ratio, a valuation metric comparing stock price to its EPS. EV/EBITDA: Enterprise Value to EBITDA, a valuation metric. P/BV: Price-to-Book Value Ratio, a valuation metric comparing stock price to its book value per share. CAGR: Compound Annual Growth Rate, the average annual growth rate over a specified period. RoE: Return on Equity, measures how much profit a company generates with shareholder equity. ROCE: Return on Capital Employed, measures profitability in relation to capital used. CMP: Current Market Price, the current trading price of a stock.