CLSA's upgrade to 'high conviction outperform' drives ONGC share 5% higher

ONGC share price: State-run Oil and Natural Gas Corporation (ONGC) shares were in demand on Tuesday, January 7, 2025, as the stock zoomed as much as  5.15 per cent to hit an intraday high of Rs 267.40 per share. 

 

The uptick in ONGC share price came after Hong Kong-based capital market firm CLSA upgraded ONGC to 'high-conviction outperform.' CLSA has set a price target of Rs 360 per share. The target price reflects an upside of 41.56 per cent from the previous close (January 6) of Rs 254.30. 

 

According to reports, CLSA stated that the Eastern Offshore Field is projected to reach peak production by the end of 2025, leading to a considerable increase in ONGC's domestic oil and gas output by approximately 10 per cent and 20 per cent respectively. The brokerage also highlighted that new gas discoveries and a rising share of gas from well interventions are expected to improve blended gas realisations. 

 

 

ONGC financial performance

 

ONGC’s profit climbed 17.1 per cent year-on-year (Y-o-Y) to Rs 11,984 crore in the September quarter of financial year 2025 (Q2FY25), as against Rs 10,238 crore in the September quarter of financial year 2024 (Q2FY24).

 

The company’s gross revenue, however, dropped 3.6 per cent year-on-year (Y-o-Y) to Rs 33,881 crore in Q2FY25, from Rs 35,162 crore in Q2FY24. 

 

With a focused approach and continued thrust on increasing domestic production, ONGC has been able to reverse the declining trend in crude oil production, the company said in a statement post results. 

 

On the gas production front, ONGC has been able to arrest the degrowth. The decline which was 3.6 per cent in Q1FY25 over Q1FY24 has been brought down to 2.1 per cent in Q2FY25 over Q2FY24. In particular for September 2024, the gas production was up 0.3 per cent over September 2023.

 

About ONGC

 

ONGC is India's largest oil and gas company and operates as a subsidiary of the Indian government.  Established in 1955 as the Oil and Natural Gas Directorate, ONGC has played a pivotal role in India's energy sector, supporting the country's efforts toward energy independence. 

 

The organisation was later reorganised as a limited company in 1994, strengthening its corporate structure to enhance operational efficiency and expand its reach.

 

ONGC’s primary focus is on the exploration, development, and production of crude oil and natural gas. With in-house expertise across all phases of the oil and gas lifecycle, from drilling and refining to transportation and marketing, ONGC contributes approximately 71 per cent of India's domestic oil and gas production. 

 

The company is known for its use of advanced technology, such as depth domain processing and volume-based interpretation tools, to stay competitive in the global energy market. 

 

Additionally, its international presence is bolstered by ONGC Videsh Limited, a wholly-owned subsidiary that holds interests in 35 oil and gas assets across 15 countries.

 

The market capitalisation of ONGC is Rs 3,34,446.72 crore, according to BSE. The company falls under the BSE 100 category.

 

At 11:32 AM, ONGC share price was trading 4.50 per cent higher at Rs 265.75 per share. In comparison, BSE Sesex was trading 0.41 per cent higher at 78,283.59 levels.