ONGC - Fundamental Analysis: Financial Health & Valuation

Last Updated Time : 05 Nov 25, 7:43 am

Fundamental Rating: 4.1

ONGC offers strong dividend yield, low valuation, and stable profitability, making it a solid long-term value pick in the energy sector. However, earnings volatility and global oil price sensitivity warrant cautious accumulation.

📊 Financial Overview

• Profitability: PAT at ₹8,024 Cr, up from ₹6,448 Cr QoQ; EPS at ₹27.6
• Margins: ROCE at 14.8%, ROE at 11.4% — decent efficiency for a PSU
• Debt Profile: Debt-to-equity ratio of 0.12 — low leverage, strong balance sheet
• Dividend Yield: 4.80% — highly attractive for income-focused investors

📈 Valuation Metrics

• P/E Ratio: 9.26 — significantly below industry average of 14.2
• P/B Ratio: ~1.02 — fair valuation relative to book value ₹251
• PEG Ratio: -2.26 — negative due to inconsistent earnings growth
• Intrinsic Value: Estimated around ₹270–₹285 based on historical earnings and sector multiples

  Simply Wall St

🏢 Business Model & Competitive Edge

• Core Operations: ONGC is India’s largest oil and gas exploration and production company, operating under the Ministry of Petroleum and Natural Gas
• Moat: Government backing, strategic reserves, and integrated upstream operations
• Growth Drivers: Global crude price recovery, domestic energy demand, and offshore exploration projects

  Business Upturn

📌 Entry Zone Recommendation

• Suggested Entry: ₹240–₹250 — near DMA50 and below intrinsic value
• Technical Indicators: RSI at 66.2 (neutral), MACD positive — mild bullish momentum

📈 Long-Term Holding Guidance

• Hold for long-term if accumulated near support; ideal for dividend and value investors
• Monitor global oil prices and domestic policy changes

✅ Positive

• Strong dividend yield and low valuation
• Quarterly PAT growth and EPS stability
• DII holding increased by 0.11%
• Government support and strategic importance

⚠️ Limitation

• Negative PEG ratio due to earnings volatility
• FII holding declined by 0.10%
• Stock down ~7% from 52-week high

📰 Company Negative News

• FY25 net income down 26% YoY due to higher expenses; profit margin dropped to 5.5%

  Simply Wall St

🌟 Company Positive News

• ONGC recommended as a top buy by Nuvama for October 2025 amid strong PSU momentum

  The Times of India

• Revenue beat expectations in FY25, up 12% YoY

  Simply Wall St

🏭 Industry

• Energy sector P/E at 14.2 — ONGC trades at a discount
• Sector driven by global oil dynamics, energy security, and infrastructure investment

🧾 Conclusion

• ONGC is a fundamentally strong PSU with attractive valuation and dividend yield, ideal for long-term conservative portfolios
• Accumulate near support zones and monitor global oil trends and policy shifts

Sources

The Times of India

+2