Energy · investment research

Oil & Natural Gas Corp

ONGC

Price & statements

Verdict

WATCHLIST

medium confidence · 3-5 years

Composite score

61/100

Weighted across all eight pillars

Business quality

77/100

Moat, returns, balance sheet, cash, management

Valuation score

31/100

At 39.8x against a sector median of 39.8x, the price embeds roughly 25% earnings growth. Anything less has to come out of the multiple.

Decision intelligence

Every conclusion states what would make it wrong

WHAT

Good business, wrong price. Track it and wait for a better entry.

WHY

• Profitability & returns scores 100/100 (improving) — ROCE was 31.2% a year ago. Sustained ROCE above the cost of capital is what compounds value.
• Growth quality scores 10/100 (deteriorating) — Top-line compounding over the reported history.
• Cash conversion scores 82/100 (stable) — Reported profit is backed by operating cash.
• Balance sheet scores 74/100 (improving) — Leverage is serviceable from current cash generation.

WHERE

Energy · Large cap · position sized to at most 0% of an equity portfolio.

WHEN

Revisit if the price approaches ₹324 or earnings catch up with the multiple.

WHAT IF WRONG

• The thesis is wrong if ROCE falls below 29% or cash conversion stays under 70% for two straight quarters.
• Valuation support fails below ₹324 of fair value — a drawdown to that level is a re-underwrite, not automatically a buy.
• Watched risk: Cyclicality — Energy (India) earnings swing with the cycle, so trailing numbers flatter the peak.

WHAT NEXT

• Read the latest quarterly cash-flow statement alongside the P&L.
• Check Crude oil — it moves the earnings base independently of execution.
• Compare against the sector peers listed below before sizing anything.

Oil & Natural Gas Corp is a competitively exposed energy business compounding revenue at 3.4% and profit at -3.9%, earning 33.4% on capital. Quality scores 77/100 and valuation 31/100 at 39.8x. The decision is therefore watchlist with medium confidence — this is analysis for learning, not investment advice.

What does this business actually do?

Business understanding before ratios

Oil & Natural Gas Corp operates in the Indian energy sector with a large-cap footprint and a listed market value of about ₹309k Cr.

Revenue is earned across 4 reported segments; profitability is driven by realisations, mix and operating leverage rather than one-off items.

Revenue drivers

• Volume growth in the core segment
• Realisation / pricing power
• Mix shift toward higher-margin lines
• Capacity utilisation

Cost drivers

• Raw material and input costs
• Employee cost inflation
• Depreciation from recent capex
• Distribution and marketing spend

Moat · 51/100

Brand & distribution

Shelf presence and recall let the company hold price through input cost cycles.

Segment mix

Refining & marketing27.3%

Growth 12.8% · margin 11% — Growing broadly in line with the overall business.

Upstream33.9%

Growth 11% · margin 33.7% — Growing broadly in line with the overall business.

Petrochemicals20%

Growth -7.6% · margin 9.2% — Flat to declining; drags the consolidated growth rate.

New energy18.7%

Growth 16.4% · margin 8.2% — Growing broadly in line with the overall business.

Analysis pillars

Score, trend and the drivers behind each — no bare numbers

Business & moat

65/100

Trend: deteriorating · weight 14%

MoatBrand & distribution
Shelf presence and recall let the company hold price through input cost cycles.
Segment concentrationRefining & marketing is 27.3% of revenue
Revenue is spread across segments, which softens single-market shocks.
EBITDA margin28.0%
Margin moved from 32.0% to 28.0% year on year.

Profitability & returns

100/100

Trend: improving · weight 16%

ROCE33.4%
ROCE was 31.2% a year ago. Sustained ROCE above the cost of capital is what compounds value.
ROE30.5%
Return on equity after leverage — read alongside debt levels.
Net margin13.7%
Share of every rupee of revenue that reaches reported profit.

Growth quality

10/100

Trend: deteriorating · weight 15%

Revenue CAGR (4y)3.4%
Top-line compounding over the reported history.
Profit CAGR (4y)-3.9%
Profit lags revenue, so growth is being bought with margin.
Growth sourceCapex-led (organic)
Capex is 12.0% of revenue this year.

Balance sheet

74/100

Trend: improving · weight 12%

Debt / EBITDA0.80x
Leverage is serviceable from current cash generation.
Debt / equity0.52x
Capital structure relative to shareholder funds.
Working capital77 days
Cycle is tight, so growth is largely self-funding.

Cash conversion

82/100

Trend: stable · weight 13%

OCF / PAT112%
Reported profit is backed by operating cash.
Free cash flow₹2,465 Cr
Cash left after maintaining and expanding the asset base.

Management & governance

66/100

Trend: improving · weight 14%

Guidance delivery84% of last 8 quarters
Whether management historically delivered what it promised.
Promoter holding52.3% (+1.57 y/y)
Promoter ownership is stable or rising.
PledgeNo pledge
No pledge disclosed in the sample data.
Institutional flowFII +0.34 · DII -0.83
Direction of institutional ownership over the last year.
Capital allocationMost operating cash is reinvested into the core …
Most operating cash is reinvested into the core business.

Industry & macro

38/100

Trend: deteriorating · weight 8%

Demand trenddeteriorating
Energy (India) demand is deteriorating.
StructureConsolidated
Consolidated — a few large players hold most of the profit pool.
Competitive intensitylow
How hard it is to keep pricing and share.
Macro driversCrude oil, Refining spreads, Government pricing policy
Variables that move the earnings base regardless of company execution.

Valuation

31/100

Trend: stable · weight 8%

P/E vs sector39.8x vs 39.8x
At 39.8x against a sector median of 39.8x, the price embeds roughly 25% earnings growth. Anything less has to come out of the multiple.
Growth-adjusted39.80 (PE/growth)
Below ~1.5 the multiple is supported by growth; above ~2.5 it depends on the market staying optimistic.
FCF yield0.80%
Cash return on the current market value, before any growth.

Financial history

Profit, cash and returns over five reported years

Year	Revenue	EBITDA	PAT	OCF	FCF	ROCE
FY2022	₹64,108 Cr	₹17,309 Cr	₹11,770 Cr	₹12,241 Cr	₹4,548 Cr	27%
FY2023	₹66,384 Cr	₹9,294 Cr	₹6,971 Cr	₹7,389 Cr	₹4,734 Cr	26.4%
FY2024	₹68,660 Cr	₹15,792 Cr	₹7,896 Cr	₹8,528 Cr	₹975 Cr	27%
FY2025	₹70,935 Cr	₹22,699 Cr	₹12,711 Cr	₹13,982 Cr	₹10,435 Cr	31.2%
FY2026	₹73,211 Cr	₹20,499 Cr	₹10,045 Cr	₹11,250 Cr	₹2,465 Cr	33.4%

No accounting-quality flags in the sample data.

Ownership & management

Who owns it, and have they delivered?

Promoter

52.3%

+1.57 y/y

Pledge

None

No disclosed pledge

FII

30.6%

+0.34 y/y

DII

7.8%

-0.83 y/y

Guidance delivered in 84% of the last eight quarters; average leadership tenure 21 years.

Most operating cash is reinvested into the core business.

⚠ Related-party transactions at 8% of revenue

Industry & macro context

Energy (India)

Demand trend

deteriorating

Cyclicality

high

Competition

low

Regulatory pressure

low

Consolidated — a few large players hold most of the profit pool.

Macro drivers: Crude oil · Refining spreads · Government pricing policy

Valuation

fair versus the sector

P/E

39.8x

Sector median P/E

39.8x

P/B

4.69x

Earnings yield

2.51%

FCF yield

0.8%

PE / growth

39.8

Estimated fair-value band ₹324 – ₹414 , built on FY2026 EPS of ₹8. Gap to the current price: +50%. Ranges are a modelling output, not a target price.

At 39.8x against a sector median of 39.8x, the price embeds roughly 25% earnings growth. Anything less has to come out of the multiple.

Risk register

What can break the thesis, and how it is monitored

Cyclicalitymedium
Energy (India) earnings swing with the cycle, so trailing numbers flatter the peak.
Monitor: Crude oil
Governancehigh
Related-party transactions at 8% of revenue
Monitor: Annual report disclosures and auditor commentary.

Ongoing thesis monitoring

The thesis is a living position, not a one-time verdict

Metric	Currently	Thesis holds if	Thesis breaks if
ROCE	33.4%	stays above 30%	falls for two consecutive years
Cash conversion	112%	stays above 80%	drops below 70% while revenue grows
Revenue growth	3.4% CAGR	tracks the 25% priced in	slows for two quarters with no margin offset
Promoter holding	52.3%	stable or rising	falls sharply or fresh pledge appears

Peers in the same sector

Compare before sizing anything

Reliance Industries Coal India

Data quality 72/100

Stated openly, as required by the product principles

• Fundamentals in this build come from a deterministic sample dataset, not licensed exchange filings.
• Segment, ownership and management figures are illustrative and must be verified against annual reports.
• Educational analysis only — not a recommendation to buy or sell any security.