ONGC

’s Earnings Dip on Crude Slide, Analysts Trim Forecasts Despite Gas Upside

’s Q2FY26 results reflect pressure from lower crude prices and stagnant production, prompting earnings downgrades. While gas volumes and OPaL margins improved, subdued oil realizations and rising costs weighed on performance. Near-term recovery hinges on output ramp-up from KG Basin and Daman field. - Financial Snapshot: - Standalone EBITDA (ex-forex) fell 3% YoY to ₹17,700 crore - Revenue declined 2.5% YoY to ₹33,000 crore - Crude realization dropped 14% YoY to $67.3/bbl; rupee depreciation cushioned the fall to ~10% - Gas revenue rose 12% on higher volumes despite NWG price drop - Segment Highlights: - OPaL EBITDA surged to ₹210 crore from a ₹10 crore loss YoY; utilization may exceed 90% - Total oil & gas sales rose 3% to 8.7 mmtoe; NWG share at 13.4%, expected to reach 30–35% in 3–4 years - Production & Guidance: - H1FY26 output down 0.2% YoY to 20.4 mmtoe (incl. JVs) - FY26 guidance cut to 40 mmtoe from 41.5 mmtoe - FY25 production was 41.1 mmtoe - Analyst Revisions: - Nomura cut FY26/FY27 EPS by 14%/17% due to volume and realization concerns - HPCL (60% owned by ONGC) offers partial offset via strong earnings on low crude prices - Growth Catalysts: - Daman field ahead of schedule, expected to contribute from Q4 - KG Basin gas output to rise from 3 to 10 mmscmd by FY27 - BP-led recovery at Mumbai High expected from January - JM Financial projects 6% output growth over FY26–28 - Valuation & Sensitivity: - ONGC trades at 4.7x FY26E EBITDA - EPS/valuation sensitivity: ±12–18% for every $7/bbl change in net crude realization ONGC’s near-term outlook remains muted amid crude volatility and output constraints. However, gas-led volume recovery and offshore ramp-ups could support a re-rating if execution stays on track.