ONGC Neutral: Target Price Set at Rs 265 by Motilal Oswal

ONGC's Fourth Quarter Results: Revenue and EBITDAX Disappoint

Motilal Oswal's research report on ONGC has highlighted the company's fourth quarter (4QFY26) standalone revenue, which came in line with their estimates at INR359 billion. However, the crude oil and gas sales figures fell short of expectations, with 4.6 million metric tons (mmt) and 3.8 billion cubic meters (bcm) respectively, representing a 4% and 5% decrease from their estimates.

Crude oil production declined by 3% on a quarter-on-quarter (QoQ) basis and 6% on a year-on-year (YoY) basis, while natural gas production dropped by 4% QoQ and 3% YoY. The decline in oil production was attributed to geological complexities at the 98/2 field in the Eastern offshore and operational issues at the DUDP project.

The research report also noted that other expenses were above estimates, with an exchange loss of INR11.8 billion in 4QFY26. Furthermore, the standalone Earnings Before Interest, Taxes, Depreciation, Amortization, and Exploration Expenses (EBITDAX) came in 7% below estimates at INR178 billion, while the standalone Absorption of Profit After Tax (APAT) stood at 11% below estimates at INR67 billion.

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Outlook and Recommendation

Motilal Oswal has reiterated its Neutral rating on the stock, with a SOTP-based target price of INR265. The research report models a compound annual growth rate (CAGR) of 2.7% in oil/gas production volumes over FY26-28.