ONGC vs. Oil India: A Comprehensive Long-Term Investment Blueprint
ONGC and Oil India, two Maharatna PSUs, dominate India's upstream oil & gas sector, contributing over 70% of domestic crude and gas output amid Brent crude stability around $75-80/bbl in early 2026. ONGC offers scale and high dividends, while Oil India provides higher growth potential via refining exposure and volume ramps. This blueprint analyzes fundamentals, performance, targets, and strategies for 5-10 year horizons.
Company Overviews
ONGC, India's largest E&P player, holds 71% crude and 84% gas share with ₹2.91 lakh crore mcap and vast offshore assets like KG-D6 ramping up. Recent Q3FY26 PAT at ₹12,615 crore (up 5% YoY) reflects resilient ops despite impairments; dividend ₹5/share declared. Oil India focuses on Assam/NE fields plus Numaligarh refinery stake, with ₹66,611 crore mcap and Q3 PAT ₹1,644 crore (down 29% YoY on seasonal factors). Both benefit from govt's energy security push, but ONGC faces mature field declines offset by JVs in Venezuela/Russia.
Financial Comparison
ONGC edges in scale (sales ₹6.58 lakh crore vs Oil India's ₹0.29 lakh crore), dividends (5.29% yield vs 2.81%), but Oil India leads ROE (14.1% vs 10.6%) and growth (3Y CAGR 48% vs 24%).
| Metric | ONGC | Oil India | ONGC/OIL Ratio |
|---|---|---|---|
| Mcap (₹ Cr) | 2,91,023 | 66,611 | 4.4x |
| Sales (₹ Cr, FY25) | 6,12,065 | 2,88,612 | 2.1x |
| PAT (₹ Cr, FY25) | 38,329 | 70,396 | 0.5x |
| EPS (₹, FY25) | 28.80 | 43.3 | 0.7x |
| ROE (3Y Avg %) | 13.8 | 14.1 | 98% |
| Dividend Yield (%) | 5.29 | 2.81 | 188% |
| Debt/Equity | 0.3 | 0.6 | 50% |
| P/E (TTM) | 7.95 | 11.15 | 71% |
| P/BV | 0.79 | 1.4 | 56% |
Performance History
Over 5 years, Oil India delivered 47.6% CAGR vs ONGC's 30.2%, driven by production growth (8-10% CAGR) and refinery upcycle; 1Y returns lag (-5% ONGC, -18% OIL) on crude softness. ONGC's sales growth averaged 9% (poor per peers), but cash flows strong at ₹90,868 Cr FY25 from ops. Dividends shine: ONGC payout 37.9% (₹12.25/share), OIL 26.6% (₹11.50/share); ONGC yields 4.8% historically vs OIL 2.7%.
Growth Prospects
ONGC targets 3-4% output growth via KG basin (20 mmt oe by FY28), HPCL synergies, and international JVs; 2026 price targets ₹330-340 (30-34% upside from ₹231). Oil India eyes 10% volume CAGR to 25 mmt oe, Numaligarh expansion (9 mmpta refinery); targets ₹547-719 (34-76% from ₹410). Risks: Crude volatility, subsidy burden (ONGC bears more), field maturity; upsides from OVL divestments, gas pricing reforms.
Dividend Edge
ONGC excels as income play: 40% payout, consistent hikes (₹12.25 FY25), 4.4% avg yield; super Maharatna status enables buybacks. Oil India trails at 27% payout but offers growth-adjusted yields; recent ₹11.50/share signals confidence post-rights issue.
Investment Blueprint
Portfolio Allocation: 60% ONGC for stability/dividends, 40% Oil India for alpha in 5-10Y horizon; total 5-8% in energy PSUs.
Buy Zones: ONGC <₹220 (support), Oil India <₹380; accumulate on Brent dips.
Targets & Horizons: ONGC ₹340 (2026, hold to 2030 for ₹500+); Oil India ₹650 avg (2026, potential multibagger).
Risk Management: Hedge with crude ETFs; exit if ROE <10%, Brent <$60 sustained. Monitor Q4FY26 (Feb), capex guidance.
Prefer Oil India for superior ROCE/volume growth if aggressive; ONGC for conservative dividend compounding yielding 15-20% annualized total returns
.png)
.png)
COMMENTS