Reduce ONGC; target of Rs 78: HDFC Securities

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26 Aug, 2025 12:21

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HDFC Securities' research report on ONGC

In 1QFY21, revenue was ~8% below our expectations owing to a lower-than-anticipated crude oil price realisation of USD 28.7/bbl (vs est. USD 31.7/bbl). EBITDA was ~15% above our expectations due to lower-than-anticipated operating expenses and employee costs. However, APAT fell by ~36%, courtesy substantially lower-than-anticipated other income.

Outlook

Our REDUCE recommendation on ONGC with a price target of INR 78 is premised on (1) muted crude oil and gas realisations and (2) lack of production growth for oil. Despite production cuts from OPEC and non-OPEC countries, we expect oil prices to remain at USD 36/41 per barrel in FY21/22E vs. USD 63/bbl in FY20, given the weak global macros. Lower oil and gas realisations will drag down profitability for ONGC.

For all recommendations report, click here

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