Buy ONGC; target of Rs 330: Emkay Global Financial

Emkay Global Financial's research report on ONGC

ONGC’s Q2FY25 SA EBITDA came in at Rs170.3bn, a 9% beat to our estimate, led by lower-than-expected survey-dry wells expense and levies. RPAT at Rs119.8bn was a 31% beat on higher Other Income. Total crude production fell 1.7% YoY to 5.2mmt (in line), whereas gas declined 2.7% YoY to 5.1bcm (1% above est). KG-98/2 oil output has ramped up to 25kbpd from 12kbpd earlier, and peak oil/gas output of 45kbpd/8mmscmd is now expected by FY25- end/early-FY26. New wells premium pricing (12% of crude) gas volumes are at 4.7mmscmd now. We slightly up our FY25-27E SA EPS 2-4% each, building higher new wells gas along with cost uptick.

Outlook

However, we lower our Sep-25E TP by 8% to Rs330, valuing ONGC at an implied 7.5x consolidated EPS vs 8x earlier due to oil price volatility. Output recovery is a positive. We retain BUY.

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