Oil & Natural Gas Corporation (ONGC IN) – Q2FY26 Result Update – Steady volume trajectory – BUY
Published on 11 Nov 2025
ONGC reported a steady sales volume inc JV of oil (+2.7% QoQ) and gas (flat QoQ) combined with an oil price realization of USD67.4/bbl in Q2FY26 vs USD66.1/bbl in Q1FY26 and USD78.3/bbl in Q2FY25. This led to a revenue of Rs330.3bn, +3.2% QoQ and -2.5% YoY (Ple Rs318.6bn, BBGe Rs323.9bn). Reported EBITDA of Rs177.0bn (-5.1%/-1.4% QoQ/YoY) was in-line with our estimate (Ple: Rs179.6bn & BBGe: Rs180.9bn). Sequentially lower DDA/write-offs of Rs74.7bn vs Rs80.0bn in Q1FY26, coupled with increase in other income of Rs34.2bn (Ple Rs26.7bn) due to addition of dividend income of Rs19.7bn this quarter vs Rs12.1bn in Q1FY26, resulted in PBT of Rs125.4bn (PLe Rs120.1bn), rising by 16.8% QoQ. PAT stood at Rs98.5bn, beating our estimates by 9.6% (Ple Rs89.9bn, BBGe Rs92.3bn, +22.7% QoQ). Going ahead, we build in 4-5% volume growth in oil and gas production in FY27/FY28E over FY25 driven by upcoming projects and well optimization plans. The stock is currently trading at 8.1x Sept FY27E SA EPS. Maintain ‘Buy’ rating with a target price of Rs292 (earlier Rs278), valuing standalone segment at 9x FY27/28E adj EPS and adding the value of investments. Key risk to our recommendation is further decline in oil prices and inability to ramp-up volumes. With every USD5/bbl change in oil price realization, conso EPS is impacted by 8-9%.
