Why is Everyone on Dalal Street Talking About ONGC?

Being a public sector undertaking (PSU) in India and operating efficiently at the same time is no easy task.

And over the years, Oil and Natural Gas Corporation (ONGC), a dominant player in the energy sector, has been among the worst hit victims of distorted policies. The company's Maharatna tag has also helped very little to improve its image.

But lately, things have started to improve. Ever since oil prices have surged, the company's stock price has shown major uptrend swings.

So far in 2026, the company's shares have rallied 25%. This has led everyone on Dalal Street to discuss the company in more detail.

So, what's brewing inside ONGC and what lies ahead for the Maharatna company?

ONGC Stock Price Performance

Over the past 5 days, ONGC share price has gained 5%.

Over 1 year, the stock has gained 18%. And over the past 5 years, the stock price has gained 175%.

In fact, since listing, ONGC shares have only traded higher in the past two instances: back in August 2024 and in June 2014.

ONGC Share Price Since Listing

Why ONGC Share Price is Rising

In early trade today, shares of ONGC and other Indian upstream oil companies rallied up to 4%.

This rally came after Oil India and Indian Oil Corporation (IOC) jointly announced a new oil and gas discovery in an overseas exploration block in Libya.

In this block, both companies hold a 25% stake each as part of an Indian consortium.

The block, located in the Ghadames Basin, has already seen multiple discoveries earlier, and this latest find comes from the sixth exploratory well, making this another successful discovery in the area.

The company is an indirect beneficiary as it holds a stake in IOC. So, this development has strengthened its international exploration portfolio.

ONGC is also a beneficiary of rising Brent crude prices. If Brent crude remains at elevated levels, with market discounting crude realisation amid low risk of windfall tax, its margins could get a significant boost.

Crude Oil Price Impact

While ONGC saw an uptick today due to exploration, it has been rising for the past few weeks owing to rising crude prices.

Upstream oil producers such as ONGC benefit from higher crude prices as they sell crude oil and oil-linked gas.

When global oil prices rise, their realisations improve, unlike downstream oil marketing companies that face pressure on margins due to higher input costs.

Crude oil prices have remained above US$ 100 per barrel despite signals from US President Donald Trump that talks were underway to form a coalition aimed at reopening the Strait of Hormuz.

ONGC, being a dominant player in India's energy sector, contributing around 70-71% of the country's domestic crude oil production and about 84% of natural gas production, has naturally benefitted from this trend.

The Maharatna PSU is vertically integrated across the entire oil and gas industry, involved in exploration, development, and production activities across basins in India.

According to reports, for every US$ 1 per barrel increase in crude prices, ONGC's annual revenue can increase approximately Rs 3-4 billion (bn).

So, this explains the reason why everyone on Dalal Street is suddenly showing a lot of interest in this Maharatna PSU.

The Dividend Factor

If the positive crude oil impact wasn't enough, ONGC has yet another kicker: it has over the years paid hefty dividends to its shareholders.

In FY25, it paid Rs 12.3 per share as dividends. So far in 2026, it has already paid two interim dividends of Rs 6 and Rs 6.25.

Its current dividend yield stands at a little above 4%.

Source: Equitymaster

A Close Look at ONGC's Financials

Coming to ONGC's financials, the company's sales and net profit have grown at a compounded annual growth rate (CAGR) of 9% and 27% over the past 5 years.

The company's ROE and ROCE have averaged 14% and 16%, respectively.

ONGC Financial Snapshot

Source: Equitymaster

What Next for ONGC?

ONGC is strategically important for India's energy security.

Given the recent surge in crude prices, the nation is accelerating its energy security strategy by boosting domestic oil and gas production. This has gained urgency due to geopolitical tensions and surging oil prices.

As per media reports, ONGC's global tender of US$ 20 billion (bn) to hire deepwater drilling rigs is a turning point in India's upstream strategy. The sheer scale of this program, along with the need to mobilise rigs within 80 days, shows a sense of urgency.

Drilling is being pushed into high-risk, frontier basins like the Andaman and Mahanadi, where commercial viability was previously considered too expensive at lower oil prices.

The new expansion initiatives are expected to boost production in the coming years. ONGC itself has been struggling with declining production in the past, which the company has now been addressing.

The Mumbai High Field, the TSP-1 is already showing encouraging production gains. Additionally, Daman Upside Development Project in Western Offshore is also on track to be monetised soon with a peak gas output expected between 4 to 5 MMSCMD.

ONGC has over 20 major development, redevelopment, and infrastructure revamp projects under execution, with a capex of about Rs 770 bn.

These projects are designed to augment production, sharpen operational efficiency, which will ensure sustained growth. Importantly, four key infrastructure and revamp projects are slated for near term completion.

Overall, rising crude prices and government-backed exploration programs, including deep-water drilling, support production growth at ONGC.

However, there are some important caveats. Crude oil prices are inherently volatile, influenced by geopolitical events, supply-demand imbalances, global economic trends, and decisions by major producers like OPEC.

A sudden drop in prices can erode profits quickly, even if production volumes remain stable. Furthermore, government tax policies introduce additional uncertainty.

Investors should carefully weigh these risks, consider corporate governance, and the stock's valuations before making an investment decision. Monitoring global oil trends and policy changes is essential for making informed decisions in this sector.

To know more about the company in detail, check out Oil and Natural Gas fact sheet and its latest quarterly results.

Happy investing.

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...