Motilal Oswal has maintained its 'Buy' rating on Oil and Natural Gas Corporation Ltd. with a target price of ₹290, implying a potential upside of 21% from the current market price of ₹240. According to the brokerage's research report dated August 18, 2026, the firm recently upgraded ONGC on inexpensive valuations, modest production growth (1% FY26-28E CAGR) and greater operational freedom amid multi-year government focus on energy security. The target price is based on the standalone business valued at 6.5x December 2027E EPS, investments at a 25% discount to current market price, and ONGC Videsh stake valued at 0.5x FY25 book value per share. As per CNBC TV18, the brokerage believes ONGC's risk-reward remains attractive, citing a combination of high dividend yields, a constructive outlook for crude prices and improving prospects at its overseas arm ONGC Videsh Ltd.
ONGC delivered robust first-quarter results that contributed to the broader market rally, with profit growth for Nifty 50 companies averaging a 10-quarter high of 18%. As reported by Motilal Oswal, large-cap firms including ONGC, Reliance Industries, JSW Steel, Hindalco, and Bharti Airtel led the earnings beat on the Nifty 50. The quarter was described as 'picture perfect' by brokerages, with 19 sectors beating estimates and the upgrade-to-downgrade ratio improving to 1.5, implying that 15 companies were upgraded for every 10 downgrades. ONGC's strong performance reinforces expectations of sustained growth despite margin pressures across other sectors.
ONGC's one-year forward dividend yield of 6.9% represents a three-year high, a level breached only twice in the last decade during crises such as Covid-19 and windfall tax implementation. As reported by Motilal Oswal, this dividend yield level has not been achieved during structural payout shifts, indicating the company's strong cash generation capabilities. The brokerage believes this dividend yield level provides significant attraction for investors seeking income-generating opportunities in the energy sector. According to CNBC TV18, this level has been breached only twice in the past decade — during the Covid-19 pandemic and the period of the windfall tax — rather than because of any structural change in the company's payout policy.
Global agencies have become more constructive on crude prices, with the US Energy Information Administration (EIA) raising its CY26 and CY27 Brent crude forecasts to $87 and $69 per barrel, respectively, representing a 6% increase from previous estimates. The International Energy Agency (IEA) has widened its CY26 supply deficit estimate to 2.7 million barrels per day. Motilal Oswal expects crude prices to remain firm even if the Strait of Hormuz reopens, pointing to still-low global inventories, which have declined by around 410 million barrels since the start of the war. After adjusting for the value of ONGC's listed investments at ₹65 per share and its valuation of OVL at ₹23 per share, the brokerage estimates that the market is effectively pricing in a Brent crude price of only $65 per barrel over 2QFY27-FY28. Motilal Oswal believes this is overly conservative given the current industry backdrop.
ONGC Videsh's turnaround over the last two quarters, coupled with multiple assets moving into development, could add approximately ₹15 per share to the target price if the run-rate sustains. According to Motilal Oswal's valuation, this international subsidiary's performance improvement is factored into the overall target price calculation. The brokerage values ONGC Videsh at 8x P/E ratio to reflect its improving operational metrics and strategic asset development initiatives. The turnaround at OVL over the past two quarters, coupled with multiple assets moving into the development phase, could add around ₹15 per share to Motilal Oswal's target price if the improved run-rate is sustained. The brokerage values this potential at 8x price-to-earnings.
ONGC announced the successful commissioning of gas evacuation facilities at Khoraghat GGS-1 in Assam's Golaghat district on August 18. The facility will enable surplus associated natural gas from the Upper Assam Shelf to be processed and evacuated through the North East Gas Grid (NEGG), developed by Indradhanush Gas Grid Ltd. (IGGL). The development follows the commissioning of the Dergaon-Dimapur Pipeline, which has connected Nagaland to the North East Gas Grid and the National Gas Grid. The new connectivity will facilitate the utilisation of nearly 1 lakh standard cubic metres (SCM) of gas per day from ONGC's Jorhat asset. ONGC is also developing hook-up facilities at Jantapathar and Kasomarigaon to connect additional producing fields from its Jorhat Asset to the North East Gas Grid. The projects are expected to augment gas availability, reduce flaring and strengthen the gas-based economy in the region.
