ONGC on January 31 announced its standalone and consolidated results for the quarter ending December 31, 2024, through an exchange filing. The company reported a 6.92% decline in its consolidated net profit. Let’s take a look at the varying views by leading brokerages regarding the company’s future performance.
In early trading hours today, February 4, the ONGC share price is up by 2.23%, trading at Rs 254.35.
1. What do brokerages say?
CLSA: Strong conviction in production growth, but cautious on profitability
The brokerage firm, CLSA maintained a High Conviction Outperform rating on ONGC with a target price of Rs 360 per share. According to the brokerage firm, ONGC’s standalone Q3 EBITDA exceeded estimates, primarily driven by factors such as the stronger than expected oil and gas sales volumes. On the flip side, the profit fell short of expectations by 11% due to the result of higher recouped costs.
Furthermore, the brokerage house believes that ONGC is on track to meet its production growth guidance for new fields. It also cited the benefits from rising shares of new well gas in its output over the next few years.
However, the brokerage firm has cut its FY25 EPS estimate by 5% due to cautious outlooks on the company’s production and profitability.
Jefferies: Favorable risk-reward outlook with strong production expectation
The international brokerage house, Jefferies remained positive on ONGC. The firm has maintained its But rating with a target price of Rs 375. It also highlighted that ONGC’s production growth outlook over the next few years, particularly from 2025 to 2028, looks strong.
According to the brokerage firm, the partnership with BP is expected to revive production from ONGC’s largest field. Furthermore, the firm has raised its FY26/FY27 earnings estimates by 2% and 4%, respectively.
Nuvama: Cautious stance amidst production concerns
The brokerage firm, Nuvama remained cautious on ONGC and maintained a Reduce rating with a target of Rs 233. According to the firm , one of the primary reasons for this is the company’s track record of missing its production guidance.
The firm in its report pointed out that there is also uncertainty related to whether the partnership with BP will only help arrest the decline of Mumbai High field production or drive actual growth.
Further it added the new well gas (NWG) premium pricing provides a short term respite. However, this is expected to be diluted by higher lifting costs. Despite a potential 3% increase in PBT from NWG, the company’s overall performance remains uncertain.
2. ONGC Q3FY25 performance
ONGC on January 31 released its Q3FY25 results . The company reported a 6.92% decline in its consolidated net profit, which stood at Rs 9,783.64 in Q3FY25. This was lower than the Rs 10,511.23 crore recorded in the same period last year. When compared to the previous quarter, where the company had earned a profit of Rs 9,878.44 crore, the Q3 profit showed a dip. The company’s revenue from operations also saw a decline, reaching Rs 166,096.68 crore in the reported quarter, down from Rs 167,356.63 crore in the previous year.
3. ONGC stock performance Vs Nifty 50
Over the past week, ONGC saw a positive movement in its stock price, rising by 2.31%. However, looking at a longer time frame, the ONGC share price has faced a decline.
In the past month, it fell slightly by 0.02%, and over the last six months, it dropped by 18.03%. When compared to its performance over the last year, ONGC’s share price has seen a 3.25% decrease.
In contrast, the Nifty 50 index has shown a more positive trend, with a 2.10% increase over the past five days, although it faced a 0.62% dip in the last month. The Nifty 50 faced a 2.43% drop over the last six months but had a rise of 7.83% over the past year.