HSBC-Oil Natural Gas Corp (ONGC IN) Reduce：Nothing to be excited about yet-20251113

2Q earnings were supported by subsidiaries but coreproduction growth failed to excite; oil prices were a drag

We continue to see downside risk on oil price and muchslower ramp up of production than company guidance

Maintain Reduce with a lower TP of INR200 (from INR210)as we cut earnings estimates

We are bearish on oil prices which impacts both oil and gas realisations for ONGC.Our global oil & gas team in its report titled OPEC+ hits pause, not stop button,4 November 2025, maintained its USD65/bbl Brent oil forecast as they continue to believethat 2026 will still likely witness oil surplus. For ONGC, earnings from both oil and gasstreams are oil price dependent, especially if Brent stays below USD65/bbl. Foradministered price mechanism (APM) driven gas, it is 10% of Brent (with a ceiling price ofUDS6.75/MMBtu) and new well gas is at 20% premium to APM gas. However, we doexpect blended realisation of gas increase as share of new well gas continues to increase.