Domestic brokerage firm Motilal Oswal has upgraded Oil & Natural Gas Corporation Ltd.'s rating to 'Buy', implying a potential upside of 22% from current levels. According to the brokerage's research, this optimism is premised upon a combination of inexpensive valuations, improving production growth, and ONGC being a beneficiary of a multi-year government focus to strengthen India's energy security. The latest analyst consensus supports this bullish outlook, with 30 analysts covering the stock maintaining a consensus rating of 'Buy' and an average target price of ₹308, indicating a potential upside of 29% from the current trading price of ₹238. This represents a significant improvement from the earlier target price of ₹288. ONGC shares surged during Monday's trading session, hitting an intraday high of ₹241.20 per share and closing at ₹240.10 per share with a market capitalisation of ₹3,02,304.11 crore. The stock has a return on equity (ROE) of 10.06% and has declined 14.59% in three months.
While a peace MOU has been reached in West Asia, according to forecasts by the US EIA and the brokerage's view, OECD commercial inventories of crude oil and liquid products are unlikely to normalise for CY26 and H1 CY27. This is likely to keep crude prices elevated, and Motilal Oswal has raised its Brent price assumptions to $84.2/ $75 per bbl for FY27/FY28 from $75/$65 per bbl earlier. The brokerage believes crude prices could remain supported because global oil inventories are unlikely to normalise quickly. The stronger oil price outlook is expected to improve ONGC's earnings over the next two financial years. The brokerage models ~2.6% volume growth overall (Oil: 1.6%, Gas: 3.7%) between FY26 and FY28, with major projects such as the Daman Upside Development Project (DUDP), KG-98/2 offshore field and the government's Samudra Manthan initiative contributing to higher production.
This revision leads to a 9%/18% rise in ONGC's FY27/FY28 Consolidated PAT. The brokerage has increased its estimates for standalone profit after tax (PAT) growth to over 16% and 22% in FY27 and FY28. The brokerage values the standalone business at 6.5x December 2027 EPS, investments at a 25% discount to current market price, and ONGC Videsh Ltd. stake at 0.5x FY25 book-value per share to arrive at a target price of ₹288. The updated target price of ₹308 based on analyst consensus reflects the improved market sentiment and represents a significant upside potential from current market levels. The stock has a 52-week high of ₹307.50 per share achieved on April 29, 2026, and a 52-week low of ₹227.60 per share recorded on June 30, 2026. ONGC's gas price realisation will continue to witness an uptick as 7%-8% of volumes every year qualify for higher new-well gas prices, with the brokerage building in 40% dividend payout in FY27, which implies a 6% dividend yield at the current market price.
ONGC shares are trading 1.8% higher on Monday at ₹242.08, reflecting positive market response to the rating upgrade. However, the stock is down 8.5% in the last one month and has therefore trimmed its year-to-date gains down to just 1.7%. According to CNBC TV18, of the 31 analysts who have coverage on the stock, 22 have a 'buy' rating, five have a 'hold' rating and four have a 'sell' rating. The brokerage believes energy security as a theme will remain a key focus for many years due to India's crude oil imports at 90% of total demand being unsustainably high and India having under-invested in the upstream sector over the past decade. The timely start-up/ramp-up of the DUDP and KG-98/2 projects could boost ONGC's earnings given the strong price realization outlook. Despite the positive outlook, Motilal Oswal has highlighted risks including weaker-than-expected crude oil prices, delays in major projects such as DUDP and KG-98/2, or changes in government regulations and gas pricing policies that could affect ONGC's earnings outlook.
