- CLSA raised ONGC's 12-month target price from Rs 315 to Rs 405, a 53% upside
- Elevated crude prices and no windfall tax boost ONGC's earnings and stock outlook
- At $90 Brent, ONGC offers 65% upside and a dividend yield of about 10%
Multinational brokerage CLSA has raised the target price for Oil and Natural Gas Corp. citing higher income due to elevated crude prices and no windfall tax from the government. The 12-month price target has been revised from Rs 315 to Rs 405, implying an upside potential of 53% over the previous close. The rating remains 'High Conviction Outperform'.
At $90 per barrel Brent, ONGC offers an estimated 65% upside, along with a dividend yield of about 10%, analysts said. Higher crude assumptions will lift FY27 and FY28 earnings per share by 34% and 14%, respectively, prompting a target price upgrade.
ONGC has emerged as the worst‑performing exploration and production stock globally since the outbreak of the Iran war, as investor concerns over a potential re‑imposition of windfall taxes have weighed heavily on sentiment. While global upstream stocks have gained a median 13% during this period, ONGC is down around 5% month‑to‑date, reflecting fears rooted in its historical experience with subsidies and taxation, CLSA analysts said in a note.
ONGC Share Price Since Iran War
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The stock now offers an asymmetric risk‑reward profile.
The Oilfields (Amendment) Act, passed in 2025, explicitly aims to improve fiscal and contractual stability in India's E&P sector. The law prevents adverse changes to lease terms and limits the government's ability to impose retrospective or discretionary levies. Supporting this, the Petroleum Minister Hardeep Singh Puri has publicly acknowledged that windfall taxes have hurt investor confidence and stated that the new law makes such taxes difficult to impose.
If no windfall tax is announced despite elevated crude prices, investor confidence could recover sharply. Key operational triggers include a potential 15% rise in gas production as two new fields come on stream within the next three to four months, and a more than 50% month‑on‑month increase in new‑well gas prices from April, linked to the Indian crude basket, CLSA said.
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