ONGC Q1 Results Review - Robust Volume Outlook; Execution Will Be Key: Dolat Capital

Dolat Capital Report

Oil and Natural Gas Corporation Ltd.’s earnings came 4% below our estimates, mainly due to lower-than-expected other income and higher interest expense.

ONGC guided oil/gas production to significantly grow by ~22 million metric tonne/25 billion cubic metre in FY27E. Most of the incremental oil production from the KG-98/2 field, currently >12 thousand barrels per day, will touch 40/45 KBPD by Q1 FY26E end.

Incremental gas production, on the other hand, will touch ~5BCM (3.6BCM ramp up at 98/2 +1 BCM addition from new fields +0.3 bcm from the stranded gas field) over the next three years.

By FY26 end, ~25% of gas production will be eligible for 20% higher gas price which is linked to the ‘Indian Crude basket’ and 12% slope.

We broadly maintain our earnings estimates, but upwards revise our target price to Rs 328 (earlier Rs 318), mainly due to increase in the value of investments. Maintain ‘Accumulate’ rating on the stock.

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