For seven months, one of the world’s busiest oil routes, the Strait of Hormuz, has been in a state of turmoil. Crude prices have remained volatile with a sharp spike in rates. Supplies have been squeezed. Normally, that would make a win-win proposition for every oil producer. But Kotak Institutional Equities expects only one player to gain. 

For investors tracking upstream oil stocks, however, the bigger question is different. Which company is better placed to benefit if crude prices remain elevated?

The brokerage firm Kotak Institutional Equities has retained a ‘Buy’ rating on ONGC while maintaining a ‘Sell’ rating on Oil India. The brokerage sees a significantly different outlook for the two companies, despite both operating in the upstream oil and gas space.

ONGC vs Oil India: Kotak’s price targets

Kotak has maintained a ‘Buy’ rating on ONGC with a fair value of Rs 355 per share, implying an upside potential of 54% . On the other hand , it has retained a ‘Sell’ rating on Oil India with a fair value of Rs 360, translating to a downside potential of 23% from current rates.

The brokerage has also changed its earnings estimates. 

For ONGC, FY27 earnings are expected to increase by around 7%, while changes to FY28 and FY29 estimates are more modest.

ALSO READ

For Oil India, Kotak has reduced its earnings-per-share estimates by around 2.5–3.5% for FY28 and FY29.

Kotak expects ONGC’s production visibility, Western Offshore partnership and improving gas contribution to provide support. Oil India, meanwhile, faces a less favourable production trajectory.

Kotak raises its crude oil price assumption

The first change in Kotak’s latest report is its crude oil price assumption. As per the brokerage report, Kotak has raised its FY27 estimated crude oil price to $90 per barrel, from its earlier estimate of $85 per barrel.

However, it has retained its assumption of $75 per barrel for fiscal year 2028 and the long-term.The West Asia conflict has continued for seven months, with no clear timeline for a return to normal conditions.

Kotak said, “The West Asia conflict, which has resulted in one of the largest oil supply disruptions, has now continued for seven months with no clear timeline for normalisation.”

Despite the prolonged disruption, oil flows have not collapsed. According to the brokerage report, flows through the Strait of Hormuz reached around 13 million barrels per day in September 2026, the highest level since the conflict began.

Kotak said oil markets have remained “remarkably resilient” despite the disruption.

Why Kotak picks ONGC over Oil India 

What makes ONGC different from Oil India? The key factor to watch here lies largely in production.

According to the Kotak report, ONGC’s production outlook is expected to improve over the medium term. Its partnership with BP for the Western Offshore region is an important part of this outlook.

Kotak said, “ONGC remains our preferred upstream play.” The brokerage believes the technical service partnership (TSP) with BP could help ONGC keep production broadly stable over the next decade.

Under the partnership, the target is broadly flat production over the next decade.

Oil India: Kotak’s key concerns

Oil India does not have the same production visibility as its other upstream peer, according to Kotak.

The brokerage report pointed to the company’s more limited reserve base. While production could rise in the near term, Kotak expects oil production to face pressure after this initial ramp-up.

The brokerage also noted that oil and gas realisations and margins have remained weak, although Oil India’s gas production outlook is relatively better. Kotak said, “In contrast, Oil India’s reserve implies that oil production could decline after the near-term ramp-up.”

ALSO READ

That difference in the production outlook is one of the key reasons behind Kotak’s preference for ONGC.

Policy changes could support upstream companies

There is another factor investors need to watch – government policy. As per the Kotak report, recent policy changes have improved the environment for upstream oil and gas companies.

The brokerage also noted that pricing for new-well gas at 12% of Brent is favourable and broadly comparable with imported liquefied natural gas (LNG).Kotak said, “Following policy reforms, including amendments to the ORDA Act, upstream players now benefit more directly from higher oil prices.”

Disclaimer: This article is based on research reports from one or more brokerage firms and is for informational purposes only. The views, target prices, and recommendations expressed are those of the respective brokerage firms and do not reflect the official policy or position of Financial Express. This should not be construed as an offer, solicitation, or recommendation to buy or sell securities. Investors must conduct their own independent due diligence and seek advice from a SEBI-registered financial advisor before making any investment decisions.