India's Top Energy Stock: ONGC vs IOC

Revenue Growth

In terms of revenue growth, IOC is ahead of ONGC.

Over the past 5 years, IOC's sales have compounded at an annual growth rate (CAGR) of 11%. Over 3-years, the figure stands at 14%.

This has been possible due to maximum capacity utilisation for its refineries, which have consistently remained high and above 95%. This indicates strong operating efficiency.

Meanwhile, for ONGC, its revenue has grown at a CAGR of 9% over the 5-year period and 8% over a 3-year period.

Its operational efficiency has mostly remained volatile as it's an upstream producer. Hence, ONGC is a direct beneficiary of higher crude prices.

Revenue Growth Comparison: ONGC vs IOC

Profit Growth

Coming to profit growth, ONGC takes the lead here.

Over the past 5 years, ONGC's profit has grown at a CAGR of 27%.

This performance has been possible by the strong performance of its downstream subsidiaries like HPCL and MRPL, which benefited from improved refining margins while the upstream parent faced price headwinds.

Meanwhile, IOC's profit has come down over the same period. Still, over the years, it has posted decent profits backed by healthy compensation for LPG under-recoveries, stable retail fuel prices, and potentially lower LPG sourcing costs.

Profit Growth Comparison: ONGC vs IOC

Return Ratios

Coming to return ratios, both companies have commanded strong return ratios.

Over the 5-year period, ONGC's return on equity (ROE) and return on capital employed (ROCE) have averaged 14% and 16% respectively.

For IOC, the ROE and ROCE have averaged 16% and 19% during the same time period.

Return Ratios: ONGC vs IOC

Valuations

At the current price of Rs 260, ONGC trades at a PE multiple of 8.7x. Its median 5-year average PE has remained around 7.1x while 10-year median PE comes to 8.2x.

As far as price to book value is concerned, the company trades at a P/BV ratio of 0.9x, similar to its 10-year median range and slightly above its 5-year range of 0.8x.

ONGC's dividend yield has also remained in the range of 4-6% over the past 5-years.

Coming to IOC's valuations, it currently trades at a PE multiple of 5.8x. The 5-year median average has been 5.9x and the 10-year range has been around 8.6x.

On the book value front, IOC's current P/BV multiple of 1.1x is similar to its 10-year median and slightly above its 5-year median of 1x.

Lastly, IOC has commanded higher dividend yields ranging from 4-13% over the past 5 years.

Valuations: ONGC vs IOC

Growth Plans

Let's now look at the future growth plans of both companies.

IOC is executing projects at massive scale with a cumulative cost of over Rs 2.6 lakh crore. Last year in FY25, it did a capex of Rs 400 billion.

The company is expected to incur capex of Rs 360 bn worth capex per annum in the next 2-3 years, majority of which will go towards enhancing capacity of its refineries.

The Panipat Refinery is expanding capacity to 25 MMTPA with petrochemical integration, and phased commissioning. Meanwhile, its Gujarat Refinery's capacity is being increased to 18 MMTPA with an integration of new petrochemical units like polypropylene and catalytic dewaxing.

Apart from this, it also has sizeable capex plans in the renewable energy segment (through entities such as Terra Clean and Indian Oil : NTPC Green Energy) and a petrochemical greenfield project in Paradip.

For ONGC, it is undertaking the drilling of the first stratigraphic well in ultra-deep-water region of Andaman Basin. The well was spudded earlier this year in January.

The company's western offshore Daman upside development project is also nearing starting of gas production. ONGC will see as many as four major infrastructure projects nearing completion.

As mentioned at the start, ONGC is also making significant progress in the renewable segment.

The company has recently acquired PTC Energy, now rebranded as OGL One Limited, bringing seven wind power plants with a total capacity of 288.8 MW across Madhya Pradesh, Karnataka, and Andhra Pradesh into its portfolio.

Meanwhile, ONGC Videsh also remains in the mix which has successfully maintained steady operational performance despite geopolitical challenges and the decline of mature fields.

Which is Better: ONGC or IOC?

On the valuations front, IOC looks better placed than ONGC but both are overall near their long-term averages.

Overall, both the companies occupy critical positions in India's energy ecosystem, but they play very different roles.

ONGC operates at the upstream end, where earnings are closely linked to crude oil prices and exploration success. When oil prices are favourable, its profitability and return ratios tend to surge. IOC, on the other hand, sits downstream, where refining efficiency, fuel marketing, and scale drive steady revenue growth.

In simple terms, ONGC offers stronger profitability and exposure to crude cycles, while IOC offers scale, stable operations, and attractive dividend income.

For investors, the choice ultimately depends on what you value more: cyclical upside from oil prices or steady cash flows from refining and distribution.

Either way, both companies remain deeply tied to India's long-term energy story and will likely continue playing a central role as India balances energy security, fuel demand, and the transition towards cleaner energy.

For more details, check out Equitymaster's compare company pages, which have many other analytical numbers.

Happy Investing.

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