Analysis: Oil and Natural Gas Corporation Limited

Growth thesis

ONGC is India's largest state-owned oil and gas explorer, producing crude oil and natural gas from domestic fields and operating downstream assets like the Numaligarh refinery. Growth is driven by a disciplined capex program—INR 8,800 crore in FY26 and INR 9,200+ crore in FY27—targeting 75 wells in FY26 and 100 in FY27, lifting crude output to 3.8 MMT in FY27 and 4 MMT by FY28, with gas rising to 3.8 bcm in FY27 and potentially 5 bcm pending pipeline connectivity. The Numaligarh refinery expansion to 9 MMTPA by December 2025 and a petchem unit by FY28-end add downstream earnings, while new well gas premiums of 20-25% and deepwater exploration in Andaman and other basins provide upside. Over 2-3 years, production volumes and refinery throughput should scale, but execution hinges on timely pipeline approvals and well drilling milestones, with management consistently meeting volume guidance despite external price volatility.

Why is Oil and Natural Gas Corporation Limited stock rising?

• - Target crude production of 4 million tons by FY28 (3.8 million in FY27) - Target gas production of 5 bcm contingent on pipeline connectivity
• potential to reach 8.5 MMTOE total by FY28 - Drilling 75 wells in FY26, targeting 100 wells in FY27 to support production growth - Numaligarh refinery expansion to 9 MMTPA by December 2025
• petchem unit by FY28-end - Duliajan-Numaligarh pipeline capacity expansion to 2.5 MMSCMD by April 2026 - IGGL feeder line approval awaited
• 3.5 MMSCMD evacuation possible post 18-month construction - Exploring strategic partnerships for deepwater drilling with TotalEnergies and others - Andaman exploration: 5 wells planned
• appraisal wells contingent on 3D seismic results - New well gas premium of 20-25% expected once CGD allocations finalized - Capex trajectory: INR8,800 crores in FY26, INR9,200+ crores in FY27

Research report

companyname: Oil and Natural Gas Corporation Limited ticker: ONGC sector: Oil & Gas – Exploration & Production (upstream) with integrated refining, petrochemicals, power, and renewable subsidiaries ONGC is India's leading upstream oil and gas company and a Maharatna central public sector enterprise under the Ministry of Petroleum and Natural Gas. It finds, develops, and produces crude oil and natural gas from fields across India, and through its wholly-owned subsidiary ONGC Videsh Limited (OVL)...

Catalysts

capex, regulatory approval, geographic expansion

Growth guidance

Crude production: 3.8 MMT for FY27; Gas production: 3.8 bcm for FY27

Management consistency

consistent