JPM-Oil and Natural Gas Corporation Comfortable valuations, limited oil exposure-but limited growth-20250715

ONGC’s stock has been flat YTD despite the significant volatility in crude. Doesthis present either a buy/sell opportunity? a) On Cash Flow yields, ONGC is backto 2018/19 levels, but is cheaper than levels it was at during 2010-17, b) Dividendyields are still comfortable; but c) EV to EBITDA multiples are now higher thanCNOOC; d) Implied holding company discount for its subsidiaries has narrowedsharply from 2022 levels; e) Standalone EBITDA estimates have been cut sharplywith lower oil prices and will likely see further downgrades, but f) consolidatedearnings are supported by upside to HPCL’s EBITDA from falling crude. Whileboth gas and oil output are currently stable, they are below guidance and will likelystart to decline again. While we retain our Neutral rating due to its valuations, wesee limited upside to ONGC’s core operations. JPM’s view of Brent averaging $55/bbl in 1QCY26 could be a headwind to standalone EBITDA and stock sentiment.