ONGC , Oil India share prices rise 8%: Should you Buy Sell or Hold the stocks of upstream oil producers?

Stock Market today: Oil and Natural Gas Corporation (ONGC) , Oil India share price gained more than 8% during the intraday trades on Wednesday. ONGC was the largest gainer among Nifty 50 stocks.

ONGC Share price hit an intraday high of ₹330.95 on the NSE marking gains of more than 8% over previous days close

Oil India share price too scaled highs of ₹624.90 during intraday trades marking highs of more than 8% over the previous close

The gains for the ONGC and Oil India are being led by attractive valuations they are trading at and also the correction in the share prices seen during previous few sessions, said analysts. The handsome dividend yields by these upstream oil and Gas majors is also driving gains for ONGC and Oil India Ltd share prices. Among key reasons for analysts remaining positive on the prospects of these stocks are rising production, better gas prices for domestically produced gas, healthy net realisations and also the expansions and ramp up of Numaligarh Refinery by Oil India.

Vardhrajan S and kishan Mundhra at Antiques Stock broking believe that ONGC is all set to deliver the highest production growth in recent times with the ramp-up of 98/2 field production. Oil price and gas price realizations remain strong compared to historical levels, leading to strong free cash flow generation. Incremental investments are likely to be value accretive because of elevated oil and gas realization. The ONGC stock is offering a first Half FY27 dividend yield of 3.8%.

Analysts at Motilal Oswal Financial Services said that they value the standalone business of ONGC at 8 times FY26 estimates adjusted Earnings per share of ₹32 and add the value of investments to arrive at a target Price of ₹360, implying almost 10% potential upside for the stock.

Oil India to Benefit from key expansions

Oil India Ltd management post Q4 had reiterated its target of increasing production from 6.5mmtoe (million metric ton of oil equivalent) in FY24 to 9mmtoe by FY26. Analysts at Motilal Oswal Financial Services build in oil and gas production of 3.7mmt and 4.2bcm in FY26, respectively for Oil India. Further Numaligarh refinery (NRL) is slated to start in December’25, with the Paradeep-Numaligarh pipeline expansion set to be completed by Sep’25. Construction of the Rs7200 Crore Poly Propylene project (360 KTA capacity) at NRL will begin in 2QFY25.

Analysts at Elara Securities also expect Oil India to maintain strong production growth, at least in the next five years, given the most favorable oil & gas prospects for the Assam-Arakan basin amongst all basins, pan-India, as per Directorate General of Hydrocarbons, as also demand boost led by the upcoming Indradhanush Gas Grid, Guwahati-Barauni gas pipeline (by mid-CY24) and Numaligarh Refinery capacity expansion (by 6mn tonnes by Q3FY25). Oil India is one of the top picks of Elara among oil & gas stocks and raise target price to ₹823 on higher FY26 estimates Enterprise Value by Ebitda (EV/Ebitda) multiple assumption at 7.0 times on expectations of strong production growth in the next five years.

Disclaimer: The views and recommendations above are those of individual analysts or broking companies, not Mint. We advise investors to check with certified experts before making any investment decisions