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Motilal Oswal Report
Domestic brokerage firm has maintained its 'Buy' rating on Oil and Natural Gas Corporation Ltd. with a target price of Rs 290, implying a potential upside of 21% from current market price of Rs 240.
In the report the brokerage has highlighted three reasons ONGC's risk-reward stays attractive:
- ONGC's 1Y-fwd. dividend yield of 6.9% is at three-year high – a level breached only twice in the last decade, both times during crises (Covid-19, windfall tax), not structural payout shifts;
- global agencies have turned more constructive on crude: US EIA raised its CY26/27 Brent forecast by 6% to $87/$69 per bbl, while IEA's CY26 deficit estimate has widened to 2.7mb/d. The brokerage believes crude prices could stay firm even if the Strait of Hormuz reopens, as global inventory levels remain low (-410mb since the war began);
- ONGC Videsh's turnaround over the last two quarters, coupled with multiple assets moving into development, could add ~Rs 15/share to its target price if the run-rate sustains (valued at 8x P/E).
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Motilal Oswal models ~1% volume growth overall (Oil: -0.3%, Gas: +2.1%) and value the standalone business at 6.5x Dec'27E EPS, investments at a 25% discount to CMP, and OVL stake at 0.5x FY25 book value per share to arrive at a TP of RS 290.
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