Buy ONGC; target of Rs 310: Emkay Global Financial

Emkay Global Financial's research report on ONGC

ONGC’s Q3FY25 SA EBITDA came in at Rs170.4bn, a 4% beat to our estimate, mainly led by higher-than-expected revenues. RPAT at Rs82.4bn was a 4% miss on higher DD&A and lower other income. Total crude production rose 0.3% YoY to 5.2mmt (2% beat), whereas gas declined 0.3% YoY to 5.1bcm (1% above est). KG-98/2 oil output has increased to 35kbpd currently, with peak oil capacity of 45kbpd expected by FY25-end, whereas gas ramp-up should be by mid-CY25. New wells premium pricing gas volumes are over 5.0mmscmd now. We lower FY25-27E SA EPS by 6-9% each, adjusting ex-KG-98/2 earnings, which is separate in SOTP.

Outlook

We cut our Dec-25E TP 6% to Rs310, valuing ONGC at an implied ~7.5x consolidated EPS, largely unchanged amid range-bound oil prices. We retain BUY on production uptick and attractive valuation.