Our target price of Rs205 is based on a SOTP valuation approach. ONGC’s core upstream operations (ONGC+OVL) are valued at ~3.0x Mar'27E EV/EBITDA, broadly in line with its historical mean. After adjusting for net debt, we arrive at a core equity value of Rs143/sh. To this we add the value of its listed investments (HPCL, MRPL, IOCL, GAIL) at market price adding up to Rs61/sh, yielding a (rounded-off) target price of Rs205/sh.

The key downside risks that could push the stock below our target price include: 1) A sharper than expected correction in crude prices; 2) Further stake sales by the government; 3) Further delay in KG gas production ramp-up; 4) Expensive acquisitions of global upstream assets.