Buy Oil and Natural Gas Corporation; target of Rs 340: ICICI Securities

ICICI Securities is bullish on Oil and Natural Gas Corporation has recommended buy rating on the stock with a target price of Rs 340 in its research report dated May 22, 2024.

Broker Research

May 29, 2024 / 12:05 IST

Buy

26 Aug, 2025 12:21

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ICICI Securities's research report on Oil and Natural Gas Corporation

ONGC reported adjusted EBITDA/PAT (standalone) for Q4FY24 of INR 166.9bn (-4% YoY)/INR 98.7bn (+12% YoY) vs. I-Sec’s estimate of INR 188.5/INR 98.1bn. Sharply higher other opex and flat production drove the YoY EBITDA dip, with higher other income and lower taxes. FY24 standalone EBITDA/PAT came in at INR 668bn (-13% YoY)/INR 405bn (+4% YoY). Consolidated EBITDA/PAT of INR 1.03trn/INR 504.5bn in FY24 has been very strong, driven by a sharp recovery in subsidiaries PCL/MRPL’s earnings, even as OVL’s earnings remained subdued. Going forward, the commencement of the large KG basin asset remains the key performance driver over FY25-26E – will likely fuel a material jump in production. We also expect conspicuous recovery in HPCL/MRPL’s earnings prospects coupled with reducing leverage in ONGC’s consolidated balance sheet. Reiterate BUY.

Outlook

We have raised our FY25/FY26E EPS by 1%/2.5% to factor in the higher KG output. Stronger cash flow and production outlook, coupled with meatier subsidiary earnings over the next two–three years and higher investment value of listed investments drive the uptick in our TP to INR 340 (from INR 325), 21% upside from CMP. Maintain BUY.

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