Emkay Global Financial has recommended buying ONGC and has set a target price of Rs 330.

ONGC's Q2FY25 standalone EBITDA of Rs 170.3 billion exceeded expectations by 9% due to lower expenses related to survey-dry wells and levies. The reported RPAT of Rs 119.8 billion was 31% higher than expected, driven by higher Other Income.

ONGC's total crude production declined by 1.7% YoY to 5.2 million metric tons, while gas production fell by 2.7% to 5.1 billion cubic meters, in line with expectations. However, oil output from the KG-98/2 field has significantly increased to 25,000 barrels per day from 12,000, with peak production targets of 45,000 barrels per day for oil and 8 million standard cubic meters per day for gas expected by the end of FY25 or early FY26. The firm has adjusted its FY25-27E standalone EPS estimates upward by 2-4% to account for higher new wells gas production and cost increases.

The target price has been revised down by 8% due to oil price volatility, resulting in a valuation of 7.5 times consolidated EPS.