ONGC is the largest crude oil and natural gas company in India, contributing around 70% to India’s domestic production. ONGC is one of the most profitable PSUs in India.
Let’s break down ONGC’s revenue sources-
- Crude Oil: 70%
- Natural Gas: 17%
- Value Added Products (VAP): 13%
VAP includes products like LPG, Ethane-Propane, Butane, Kerosene oil, and Naphtha.
Geographically, 93.5% of ONGC’s revenue comes from India, with the remaining 6.5% generated through international trade.
As you now have a basic understanding of the Oil and Gas giant, let’s discuss ONGC’s share price target by 2030 below.
ONGC Share Price Target 2030
Currently, ONGC’s share price is trading at around Rs 185 to Rs 190, and it has already provided a 50% return in the past year. Still, the stock is trading at approximately 0.84 times its book value.
We have divided the ONGC share price target into 3 parts –
- ONGC Share Price Target 2023
- ONGC Share Price Target 2025
- ONGC Share Price Target 2030
So that you can get a broad view of how the stock may perform in the future based on fundamental analysis, technical analysis, and expert analysis.
#1. ONGC Share Price Target 2023
According to market experts, ONGC is currently trading at a 5-year earlier price range, as you can see in the chart below.
If it breaks the current resistance level to keep the momentum, then ONGC’s share price is expected to reach 210 by the end of the 2023 fiscal year.
#2. ONGC Share Price Target 2025
Global crude oil prices have recently surged to nearly three-month highs around $93 per barrel. This price hike was driven by production cuts by major oil producers like Saudi Arabia and Russia, as well as rising demand from China.
Analysts are optimistic that the current geopolitical situation will further increase crude oil prices globally, and that will help ONGC improve its profits (which will be discussed in the next section).
However, the year 2024 would give a slight fall in the share price as the Indian govt. Is expected to increase subsidy in LPG gas before elections.
Considering analysts’ views and the above factors, you can expect the ONGC share price target by 2025 would be around Rs. 250.
#3. ONGC Share Price Target 2030
According to Motilal Oswal’s experts, ONGC can improve oil and gas production from mid-CY23 as mentioned below –
- Oil – 10%
- Gas – 20%
This would help ONGC improve its revenue plus profits. That will eventually boost its share price. Experts are expecting the ONGC share price to reach 350 by the 2030 fiscal year because of strong fundamentals and expect a boost in gas demand in upcoming years as the Indian economy grows further.
ONGC Fundamental Analysis
#1. Revenue Growth
ONGC has demonstrated notable revenue growth in recent years, showcasing its ability to generate substantial income through its oil and gas operations. In 2020, ONGC sales volumes decreased due to low demand during the COVID-19 lockdown period.
However, the revenue growth has been consistent since the 2021 financial year.
Here’s a snapshot of ONGC’s revenue over the past few years:
|ONGC Revenue Growth (2019-23)|
|Year||Revenue (in Crores)||Revenue Growth|
As you can see, there have been ups and downs, especially due to the impact of global events like the pandemic. But a significant uptick in revenue in recent years could be a positive indication of future growth.
#2. Profit Growth
ONGC’s profit growth is volatile, and various factors because of the global oil prices and production levels fluctuations.
ONGC reported a near 34% YoY fall in its standalone net profit to Rs 100.2 bn in the June 2023 quarter, along with its total income that declined 17.8% YoY to Rs 353.4 bn.
Here’s how ONGC’s profits have fared from 2019 to 2023:
|ONGC Profit Growth (2021-23)|
|Year||Profit (in Crores)|
ONGC’s return on equity (ROE) over the last three years has been relatively low at 13.9% as compared to its competitors like Oil India (we’ll discuss this in the next section), which could be a red flag.
If ONGC manages to maintain its profitability in the upcoming future that would help it build investor’s confidence and give better returns.
#3. Peer Comparison
ONGC has outperformed Hindustan Oil Exploration Co. (HOEC) in terms of stock performance over the last year, with a nearly 50% return compared to HOEC’s 20%. This suggests that ONGC has been a better investment choice during this specific time frame.
However, ONGC has slightly lagged behind Oil India’s performance, which has provided a 55% return over the same period. While ONGC’s performance is strong, it’s essential to consider that the stock market can be influenced by various factors, and past performance doesn’t guarantee future results.
You can also check out the IOC share target price for 2025 in our latest article.
ONGC provides a healthy dividend yield of 6.02%, though the dividend payout keeps on fluctuating (see snapshot). However, the company has maintained a healthy dividend payout of 32.2% in the past.
You can check out last year’s dividend history below –
Technical Analysis of ONGC Stock
Currently, the stock has 2 buy oscillators (momentum and MACD) and 9 neutral ones, including RSI at 67.91. It shows some reversal may happen in the stock price.
Moving averages are also strongly signaling a buy with 14 buy indicators and 1 neutral. The stock is trading above DMA 50 at 176 and DMA 200 at 162.
Major Factors Affecting ONGC Business
#1. Positive Factors
According to experts at Motilal Oswal, ONGC has some exciting prospects ahead in 2023. Two major factors are boosting its outlook:
- Increased domestic oil and gas production –When ONGC produces more oil and gas, it can sell a larger quantity in the market. This increased sales volume directly contributes to higher revenue, and production cost will decrease. Eventually, it will increase the profitability of the oil producer.
- Crude oil price rise – Oil prices have shot up because OPEC and its buddies (OPEC+) are cutting oil production until the end of 2023. Experts say oil prices might hit $100 per barrel. This is good news for ONGC because it means they’ll make more money from their oil sales. And, by the way, LNG prices tend to follow crude oil prices.
These developments are expected to benefit ONGC, making it a top pick for 2023 in the sector.
Over the last three years, ONGC consistently paid out about 33% of its profits as dividends. Alongside the anticipated production growth and better gas segment profitability, this translates to a robust dividend yield of 13.6% for FY23.
For a significant period of 10 quarters, domestic APM gas prices were below $3/mmBtu (NCV), roughly the cost of gas production for ONGC. In another eight quarters, ONGC struggled to generate profits from gas production as domestic gas prices remained below $3.5/mmBtu (NCV).
But as the govt is going to introduce gas floor pricing, as well as the rise in crude oil prices globally can help ONGC recover the losses and earn profits in the upcoming future.
#2. Risk Factors
Subsidized gas price – Due to upcoming elections in 2024, the government may keep a check on the gas prices that can affect ONGC’s profits.
When the government subsidizes gas prices like LPG, ONGC is compelled to sell its products to consumers at prices significantly below market rates, which has a significant impact on its profitability.
If you look at the past 3 years’ performance, the ONGC stock has given a solid 38% YoY return, which shows stable growth.
As per the experts’ opinion, if ONGC continues its momentum, the ONGC share price target can be around 350 by 2030 based on all the facts.
However, you should do your own research or seek professional experts before making any investment decisions.
You can also read about other stocks’ target prices –
- Tata Power Share Price Target
- BHEL Share Price Target
- Adani Power Shares Target Price
- Suzlon Share Price Target
ONGC has historically been a stable and profitable company, making it a potential candidate for long-term investment. However, like any investment, it carries some level of risk, and it’s essential to diversify your portfolio.
Several factors, including global oil prices, production levels, government policies, and geopolitical tensions, can influence ONGC’s share price.
Approach your investment in ONGC with a long-term perspective, diversify your portfolio, and stay informed about industry and market trends.