ONGC - Fundamental Analysis: Financial Health & Valuation

Last Updated Time : 19 Sept 25, 2:16 pm

Fundamental Rating: 4.3

📊 Core Financials Overview

Profitability

PAT this quarter: ₹8,024 Cr vs ₹6,448 Cr — strong absolute earnings, despite a –10.2% variation.

EPS: ₹27.6 — robust, supporting valuation.

Return Metrics

ROCE: 14.8% and ROE: 11.4% — solid for a capital-intensive PSU.

Debt Profile

Debt-to-equity: 0.12 — low leverage, enhancing financial flexibility.

Dividend Yield: 5.20% — attractive for income-focused investors.

Cash Flow: Supported by steady upstream operations and regulated gas pricing.

💹 Valuation Indicators

Metric Value Commentary

P/E Ratio 8.54 Deeply undervalued vs. industry average of 11.6 — strong value signal.

P/B Ratio ~0.94 Trading below book value — suggests margin of safety.

PEG Ratio –2.08 Negative due to earnings volatility — valuation may be conservative.

Intrinsic Value Estimated near ₹260–₹275 Current price of ₹236 is ~10–15% below fair value — favorable entry point.

🧠 Business Model & Competitive Advantage

Oil and Natural Gas Corporation Ltd. (ONGC) is India’s largest upstream oil and gas PSU, with operations spanning

Core Segments

Exploration & Production (E&P): Crude oil and natural gas from onshore and offshore fields — Mumbai High, Assam, KG Basin.

Subsidiaries

ONGC Videsh Ltd. (OVL): International E&P operations.

MRPL: Downstream refining and petrochemicals.

Revenue Streams

Crude oil sold to refineries at benchmark-linked prices.

Natural gas supplied to industries and utilities under regulated pricing.

Strategic Strengths

Vertically integrated model — upstream, midstream, and downstream.

Government backing ensures policy stability and strategic importance.

Investments in enhanced oil recovery (EOR) and redevelopment of aging fields.

ONGC’s competitive edge lies in its scale, resource base, and national energy role, making it a cornerstone of India’s energy security

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📈 Technical & Sentiment Signals

RSI: 49.6 — neutral zone, no strong momentum.

MACD: Slightly negative — mild bearish crossover.

Volume: Above average — suggests active interest.

DMA 50/200: Price below both — short-term weakness, long-term support near ₹245.

🎯 Entry Zone & Long-Term Guidance

Suggested Entry Zone: ₹220–₹235 — near support and below intrinsic value.

Long-Term View: ONGC is a fundamentally strong PSU with low debt, high dividend yield, and strategic importance. Suitable for long-term holding, especially for investors seeking exposure to energy and commodity cycles. Its valuation and yield make it a defensive anchor in any portfolio.

You can explore ONGC’s business model breakdown or its energy value chain analysis for deeper insights. Let me know if you'd like a comparison with Oil India or GAIL.

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