ONGC Q4 Results: CLSA, Jefferies Bullish Despite PAT Miss; Production Revival Fuels Optimism.
Oil and Natural Gas Corporation (ONGC) reported its Q4FY25 results with a mixed bag of numbers, revealing steady operational performance but a significant dip in profitability due to a spike in exploratory well expenses. Despite the earnings miss, top brokerages CLSA and Jefferies remain bullish on ONGC, citing strong fundamentals, production revival, and improving margin visibility.
Key Financial Highlights: ONGC Q4FY25
| Revenue | ₹34,982 crore (↑4% QoQ) |
| Standalone EBITDA | ₹19,008 crore (↑9% YoY, flat QoQ) |
| Standalone PAT | ₹6,448 crore (↓22% QoQ, 31% below estimates) |
| Consolidated PAT | ₹8,860 crore (↓3% below expectations) |
| Operating Margin | 54.3% (↓QoQ but above estimates) |
| Dry Well Expenses | ₹4,173 crore (vs ₹1,467 crore in Q3) |
Brokerage Views: High Conviction in Turnaround
CLSA: High-Conviction ‘Outperform’, Target ₹360
CLSA reaffirmed its high-conviction ‘Outperform’ rating on ONGC with a price target of ₹360, attributing the PAT miss to non-recurring dry well provisions, not a weakness in core operations. The brokerage highlighted:
- Oil and gas production rose 5% and 4% YoY, respectively.
- Ramp-up of the KG-DWN-98/2 (KG-98/2) deepwater field driving output growth.
- Gas realization improved by 4% QoQ, aided by pricing from newer wells.
- “Excluding dry well costs, ONGC’s operational metrics are strong. The KG-98/2 field adds visibility to both volumes and margins,” CLSA noted.
Jefferies: Retains ‘Buy’, Target ₹375
Jefferies maintained a ‘Buy’ rating on ONGC with a price target of ₹375, citing resilient operational metrics and a second consecutive quarter of production growth.
While the bottom line was impacted by dry well write-offs, the brokerage emphasized:
- Stable core earnings performance.
- Strength in daily crude and gas output trends.
- Strong EBITDA contribution from subsidiary HPCL.
- Crude realization rose 2% QoQ (though still 9% lower YoY).
- Margins remained intact despite one-off exploration costs.
- “ONGC is showing early signs of a sustained turnaround in upstream performance,” Jefferies added.
ONGC Share Price Details (As of May 21, 2025)
| Share Price | ₹251.50 (Open), ₹251.95 (High), ₹247.76 (Low) |
| Market Cap | ₹3.13 lakh crore |
| P/E Ratio | 7.86 |
| Dividend Yield | 5.42% |
| 52-Week High / Low | ₹345.00 / ₹205.00 |
Production-Led Growth Outlook Brightens
Despite the headline miss in profits, ONGC’s consistent production increase, supported by new field ramp-ups and steady crude realization, suggests stronger earnings visibility going forward. Both Jefferies and CLSA agree that the core operations remain robust and any short-term hit from dry well costs is not a reflection of ONGC’s long-term performance.
With supportive crude pricing, rising volumes, and healthy margins, ONGC appears poised for a sustained recovery in upstream operations, making it a compelling long-term investment story.
