Kotak Institutional Equities maintains a BUY on ONGC with a fair value of ₹355 and a SELL on Oil India with a fair value of ₹360. The brokerage raised its FY27 crude oil price assumption to $90 per barrel from $85, while retaining its FY28 and long-term assumptions at $75 per barrel. Kotak prefers ONGC over Oil India, citing a stronger medium-term production outlook, better realisations, rising contribution from new fields and relatively inexpensive valuations.
Kotak raises FY27 crude oil price assumption
Kotak Institutional Equities said the West Asia conflict has resulted in one of the largest oil supply disruptions in recent history, with the disruption persisting for seven months and limited visibility on a return to normalcy. However, the brokerage noted that global oil markets have remained resilient and largely well managed.
The brokerage said crude flows through the Strait of Hormuz have improved, reaching around 13 million barrels per day in September 2026, the highest level since the conflict began. While Brent crude averaged nearly $100 a barrel in the first half of FY27, Kotak expects prices to ease in the second half, assuming hostilities do not intensify and supply flows continue to normalise.
Against this backdrop, Kotak raised its FY27 Brent crude assumption to $90 a barrel from $85, while retaining its FY28 and long-term assumption at $75 a barrel.
Why Kotak prefers ONGC over Oil India
Kotak said ONGC remains its preferred upstream play, despite recent production weakness and challenges at KG-98/2. The brokerage expects the company’s outlook to improve, supported by rising gas production from new fields and higher gas realisations from NWG.
More importantly, Kotak highlighted ONGC’s technical service provider (TSP) agreement with BP for its Western Offshore assets, which account for around 70% of production. The agreement is expected to strengthen ONGC’s medium-term production outlook. While ONGC’s base case assumes a 5.5% annual production decline, the TSP targets broadly flat production over the next decade, according to the brokerage.
In contrast, Kotak expects Oil India’s limited reserves to result in a decline in oil production after its near-term ramp-up.
Policy reforms support upstream players
Kotak also pointed to a more favourable policy environment for upstream companies following reforms, including amendments to the ORDA Act. According to the brokerage, these changes allow upstream players to benefit more directly from higher oil prices.
It also highlighted royalty reforms and the Samudra Manthan initiative as additional supportive measures. For new-well gas, pricing at 12% of Brent was described as favourable and broadly comparable with imported LNG.
Earnings estimates and target prices
Kotak raised its ONGC FY27 earnings estimate by around 7%, while changes to its FY28/FY29 estimates were around 2%. For Oil India, the brokerage cut its EPS estimates by 2.5–3.5% for FY28–FY29, mainly due to a moderation in its gas volume assumptions.
It maintained BUY on ONGC, with a revised fair value of ₹355, down from ₹360 earlier. For Oil India, Kotak retained its SELL rating, with a revised fair value of ₹360, compared with ₹370 earlier.
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