ONGC - Fundamental Analysis: Financial Health & Valuation

Last Updated Time : 20 Dec 25, 11:16 pm

Fundamental Rating: 4.3

📊 Financials: ONGC demonstrates solid fundamentals with ROE at 11.4% and ROCE at 14.8%, reflecting healthy efficiency. Debt-to-equity ratio is low at 0.10, indicating a strong balance sheet. EPS stands at ₹25.9, supported by quarterly PAT of ₹9,848 Cr. compared to ₹8,024 Cr. previously, though year-on-year profit variation shows -17.8%. Dividend yield of 5.31% provides strong income support.

💹 Valuation: Current P/E of 8.99 is significantly below industry average of 18.6, suggesting undervaluation. Book value of ₹267 gives a P/B ratio of ~0.87, which is attractive relative to fundamentals. PEG ratio of -2.19 indicates growth concerns despite valuation comfort. Intrinsic value appears higher than current price, offering margin of safety.

⛽ Business Model: ONGC operates in oil and gas exploration and production, benefiting from government backing and strategic importance in India’s energy sector. Its competitive advantage lies in scale, integrated operations, and long-term contracts, though global crude price volatility impacts profitability.

📈 Entry Zone: Current price ₹233 is near support at ₹205. Entry zone recommended between ₹220–235 for accumulation. Long-term holding is favorable given undervaluation, dividend support, and sectoral demand, though investors should monitor crude price cycles.

Positive

• 📌 Strong dividend yield (5.31%) provides steady income
• 📌 Low debt-to-equity ratio (0.10) ensures financial stability
• 📌 EPS of ₹25.9 with consistent profitability
• 📌 P/E of 8.99 well below industry average (18.6), showing undervaluation
• 📌 Quarterly PAT improved from ₹8,024 Cr. to ₹9,848 Cr.

Limitation

• ⚠️ PEG ratio of -2.19 signals growth concerns
• ⚠️ Quarterly profit variation (-17.8%) reflects earnings volatility
• ⚠️ RSI at 29.1 indicates oversold momentum
• ⚠️ Current price below DMA 50 (₹243) and DMA 200 (₹245), showing weak technical trend

Company Negative News

• 📉 Decline in FII holding (-0.10%) reflects reduced foreign investor confidence
• 📉 Profit variation (-17.8%) highlights earnings pressure

Company Positive News

• 📈 Quarterly PAT improved sequentially from ₹8,024 Cr. to ₹9,848 Cr.
• 📈 Increase in DII holding (+0.11%) shows domestic institutional support
• 📈 Strong dividend payout enhances shareholder value

Industry

• ⛽ Oil & gas sector supported by energy demand and government backing
• ⛽ Industry P/E at 18.6 highlights ONGC’s undervaluation compared to peers

Conclusion

✅ ONGC is fundamentally strong with undervaluation, low debt, and high dividend yield. Entry around ₹220–235 offers margin of safety. Long-term holding is recommended for investors seeking stable returns in the energy sector, though monitoring crude price cycles and earnings volatility is essential.

Would you like me to extend this into a peer benchmarking overlay comparing ONGC with other oil & gas companies, or a basket scan to identify compounding opportunities across the energy sector?