ONGC - Investment Analysis: Buy Signal or Bull Trap?
Back to ListInvestment Rating: 4.2
| Stock Code | ONGC | Market Cap | 3,23,375 Cr. | Current Price | 257 ₹ | High / Low | 278 ₹ |
| Stock P/E | 9.93 | Book Value | 267 ₹ | Dividend Yield | 4.77 % | ROCE | 14.8 % |
| ROE | 11.4 % | Face Value | 5.00 ₹ | DMA 50 | 246 ₹ | DMA 200 | 245 ₹ |
| Chg in FII Hold | 0.45 % | Chg in DII Hold | -0.27 % | PAT Qtr | 9,848 Cr. | PAT Prev Qtr | 8,024 Cr. |
| RSI | 56.9 | MACD | 5.52 | Volume | 2,02,51,990 | Avg Vol 1Wk | 3,56,64,686 |
| Low price | 205 ₹ | High price | 278 ₹ | PEG Ratio | -2.42 | Debt to equity | 0.10 |
| 52w Index | 71.6 % | Qtr Profit Var | -17.8 % | EPS | 25.9 ₹ | Industry PE | 18.6 |
📊 Analysis: ONGC trades at ₹257 with a low P/E of 9.93 compared to the industry average of 18.6, indicating undervaluation. Strong fundamentals include ROE of 11.4%, ROCE of 14.8%, and a healthy dividend yield of 4.77%. Debt-to-equity is very low at 0.10, reflecting financial stability. EPS of ₹25.9 supports earnings strength. However, PEG ratio (-2.42) suggests limited growth visibility, and quarterly profit variation (-17.8%) highlights earnings volatility. Technicals are stable with RSI at 56.9 and MACD positive, showing near-term momentum.
💡 Entry Price Zone: Ideal accumulation range is ₹240–₹250, close to DMA levels (246–245) and near book value (₹267). Long-term investors can accumulate gradually on dips.
📈 Exit / Holding Strategy: For existing holders, ONGC is a solid long-term candidate due to strong fundamentals and dividend yield. Recommended holding period: 3–5 years to benefit from consistent cash flows and energy sector demand. Exit strategy: consider partial profit booking near ₹275–₹280 (recent highs) while retaining core holdings for dividend income and long-term compounding.
Positive
- Low P/E (9.93) compared to industry average (18.6), indicating undervaluation.
- Strong ROE (11.4%) and ROCE (14.8%) show efficient capital use.
- High dividend yield (4.77%) provides steady income.
- Low debt-to-equity ratio (0.10) ensures financial stability.
- EPS of ₹25.9 reflects strong earnings base.
Limitation
- Negative PEG ratio (-2.42) suggests limited growth prospects.
- Quarterly profit variation (-17.8%) highlights earnings volatility.
- Volume lower than weekly average, showing reduced trading activity.
Company Negative News
- Quarterly PAT declined from ₹11,984 Cr. to ₹9,848 Cr. (-17.8%).
- DII holdings reduced (-0.27%), indicating lower domestic institutional confidence.
Company Positive News
- FII holdings increased (+0.45%), showing foreign investor interest.
- MACD positive (5.52) and RSI stable (56.9), indicating near-term momentum.
Industry
- Industry PE at 18.6, higher than ONGC’s valuation, suggesting ONGC is undervalued relative to peers.
- Energy sector demand remains strong, supported by global oil & gas consumption trends.
Conclusion
✅ ONGC is a fundamentally strong, undervalued stock with attractive dividend yield and low debt. Ideal entry is ₹240–₹250. Long-term investors can hold for 3–5 years to benefit from steady cash flows and sector demand. Existing holders may book profits near ₹275–₹280 while retaining core positions for dividend income and compounding.