Stock to buy: Brokerage firm Elara Capital has recommended oil-producing stock Oil and Natural Gas Corporation Limited (ONGC) to buy, citing opportunities amid volatility in crude oil prices as the US-Iran conflict continues.
The brokerage firm has given a target price of ₹320 per share, seeing an upside potential of up to 38%.
“While current earnings are largely supported by elevated crude realisation, the more durable investment case rests on a higher-value gas portfolio, BP-led brownfield recovery initiatives, and government-backed deepwater exploration activity. At 5.2x FY28E earnings and 0.65x FY28E book value, alongside a ~7% dividend yield, risk-reward is attractive. Our TP of INR 320 implies 6.9x FY28E P/E and 0.8x FY28E P/B. We recommend BUY. Key risks include crude prices falling below USD 70/bbl, further reservoir-related challenges at KG-98/2, continued losses at HPCL/OPaL, and adverse arbitration outcomes,” the firm said in a note.
The brokerage firm further added that the biggest disappointment came from the production front during the second-quarter earnings, with crude oil output declining 5.3% YoY and natural gas production falling 2.3% YoY. The decline was primarily attributable to reservoir-related complexities at KG-98/2, monsoon-induced delays at PRP-8/9 and temporary disruptions in customer offtake. However, we believe these issues are execution-related rather than structural in nature.
Going forward, production growth is expected to be driven by a ramp-up in gas volumes from DUDP, completion of balance wells at KG-98/2, Tapti/Daman, production enhancement initiatives led by BP in the Western Offshore region and newly awarded offshore projects worth ₹11,800 crore, the brokerage firm said.
“At 5.2x FY28E P/E, 0.65x P/B and an attractive dividend yield of nearly 7%, valuations appear compelling. We maintain a BUY rating with a target price of ₹320, based on 6.9x FY28E P/E and 0.8x P/B multiples,” it added.
ONGC Q2 results 2026 highlights
State-owned Oil and Natural Gas Corporation (ONGC) posted a 46.9% year-on-year (YoY) rise in consolidated profit after tax (PAT) to ₹18,534.82 crore in the second quarter of FY27 (Q2FY27), compared with ₹12,614.60 crore in the corresponding period last year. Consolidated revenue from operations climbed 25.6% YoY to ₹1,98,263.33 crore, against ₹1,57,913.60 crore in Q2FY26.
On a standalone basis, ONGC’s PAT surged 57.3% YoY to ₹15,489 crore in Q2FY27 from ₹9,847.97 crore in the year-ago period. However, the company’s financial performance moderated sequentially, with standalone PAT declining 9.1% quarter-on-quarter (QoQ) from ₹17,034 crore in the preceding quarter.
Standalone revenue declined 5.6% QoQ to ₹43,875 crore from ₹46,460 crore, while EBITDA dropped 12.3% to ₹24,860 crore compared with ₹28,355 crore in the previous quarter.
Separately, ONGC’s board announced its first interim dividend of ₹8 per equity share with a face value of ₹5 each for FY27, translating into a dividend payout of 160%.
The company has fixed November 12, 2026, as the record date to determine shareholders eligible to receive the dividend. The dividend will be paid within 30 days of its declaration.
ONGC share price returns
ONGC share price has remained largely flat in the near term, declining marginally by 0.01% over the past week. However, the stock has gained momentum over the past month, delivering a return of 6.11%.
On a year-to-date (YTD) basis, ONGC shares are down 1.32%, while they have declined 6.90% over the past one year. The stock has delivered stronger returns over the longer term, gaining 21.85% in the past three years and 49.89% over five years.
Disclaimer: This story is for educational purposes only. The views and recommendations above are those of individual analysts or broking companies, not Mint. We advise investors to check with certified experts before making any investment decisions.
