1 hr ago
Kotak favors ONGC as elevated crude prices boost upside prospects
Kotak Institutional Equities compared two Indian oil producers, ONGC and Oil India.
It likes ONGC more and has given it a Buy rating.
The brokerage believes ONGC’s production may remain broadly stable over the next decade.
A partnership with BP in the Western Offshore region is an important reason for that view.
Kotak is less confident about Oil India because its oil production may weaken after a short-term increase.
The brokerage raised its expected oil price for FY27 to $90 per barrel.
It said recent policy changes may help upstream oil and gas companies benefit more from higher prices.
However, oil markets have remained resilient even though the Strait of Hormuz has faced prolonged disruption.
Kotak Institutional Equities retained a Buy rating on ONGC with a fair value of Rs 355, implying 54% upside.
The brokerage maintained a Sell rating on Oil India, assigning a fair value of Rs 360 and indicating 23% downside.
Kotak raised its FY27 crude-price assumption to $90 per barrel but kept its FY28 and long-term assumption at $75.
ONGC’s production outlook is supported by its Western Offshore partnership with BP and improving gas contribution.
Oil India faces concerns over its limited reserve base and a possible decline in oil production after a near-term ramp-up.
- Who
- Kotak Institutional Equities, ONGC, and Oil India.
- What
- Kotak retained a Buy rating on ONGC and a Sell rating on Oil India while revising its oil-price and earnings estimates.
- Where
- The analysis concerns Indian upstream oil companies and disruptions affecting the Strait of Hormuz and West Asia.
- When
- The report discusses FY27, FY28, FY29, and a seven-month period of West Asia conflict; it also cites September 2026 oil flows.
- Why
- Kotak expects ONGC to have stronger production visibility, while Oil India faces a less favorable production trajectory.
ONGC investment case
Oil India investment concerns
Production outlook
ONGC investment case
Kotak expects ONGC’s production outlook to improve, with its BP technical service partnership supporting broadly stable production over the next decade.
Oil India investment concerns
Kotak expects Oil India’s oil production to face pressure after a near-term ramp-up because of its more limited reserve base.
Brokerage recommendation
ONGC investment case
Kotak retained a Buy rating on ONGC and assigned a fair value of Rs 355 per share.
Oil India investment concerns
Kotak retained a Sell rating on Oil India and assigned a fair value of Rs 360 per share.
Earnings outlook
ONGC investment case
ONGC’s FY27 earnings estimate was increased by around 7%, while improving gas contribution could provide support.
Oil India investment concerns
Oil India’s EPS estimates for FY28 and FY29 were cut by approximately 2.5%-3.5%, although its gas-production outlook is relatively better.
Key facts
- ONGC rating
- Buy; fair value Rs 355 per share; implied upside of 54%.
- Oil India rating
- Sell; fair value Rs 360 per share; implied downside of 23%.
- FY27 crude-price assumption
- Raised by Kotak from $85 to $90 per barrel.
- Longer-term crude-price assumption
- Retained at $75 per barrel for FY28 and the long term.
- ONGC FY27 earnings estimate
- Increased by approximately 7%.
- Oil India FY28-FY29 estimates
- EPS estimates reduced by approximately 2.5%-3.5%.
- Strait of Hormuz flows
- Reported at around 13 million barrels per day in September 2026, the highest level since the conflict began.
Quotes
Kotak Institutional Equities
Brokerage firm providing the research assessment
“The West Asia conflict, which has resulted in one of the largest oil supply disruptions, has now continued for seven months with no clear timeline for normalisation.”
financialexpress.com
“Following policy reforms, including amendments to the ORDA Act, upstream players now benefit more directly from higher oil prices.”
financialexpress.com
Sources
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