Stay 'Neutral' On ONGC Shares Maintains Motilal Oswal Post Q2 Results — Details Inside

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Motilal Oswal Report

In the past few quarters, Oil and Natural Gas Corporation Ltd. has struggled to raise production/sales, with no meaningful production/sales growth YoY in Q2.

Further, we like the increased exploration intensity (which is key to building a robust development pipeline), though we believe it will likely be accompanied by higher dry well write-offs, which will weigh on earnings.

Also, the benefits of increased new well gas proportion for ONGC will be mostly offset by subdued gas realization amid a weaker crude oil price outlook.

We arrive at our SoTP-based target price of Rs 250 as we model a CAGR of 2%/3% in oil/gas production volume growth over FY25-27.

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