ONGC needs more than higher crude oil prices

crude prices. That is primarily why ONGC shares have not rallied like their global peers since February-end when the ongoing West Asia conflict began.Of course, some don’t expect any new windfall tax. For instance, CLSA has raised ONGC stock’s target price to ₹415 apiece, almost 60% higher than current levels.

The broking firm believes that the stock is still pricing in crude at $63 a barrel, not the current $100. Its target price is based on crude sustaining at $89 in 2027, and dropping to $82 in 2028. If the war ends over the next few weeks, these assumptions may fail to hold.

This uncertainty is also weighing on investor sentiment. Sustained outperformance will require something more structural: production growth. That has historically been ONGC’s Achilles’ heel.

For several years now, its ageing assets, such as Mumbai High, have been witnessing declining output. Production in the first nine months of FY26 remained largely flat year-on-year at about 30.6 mtoe (million tonnes of oil equivalent).ONGC is working on fixing this. Its technical partnership with BP, signed in early 2025, can potentially raise production by as much as 60% over the next decade.The December quarter (Q3FY26) already saw the production decline arrested.

Meanwhile, new gas fields can raise output, as well as blended realizations, even as gas prices increase amid attacks on Qatar’s production facilities. Revenue from new well gas fields accounted for 18% of ONGC’s Q3FY26 revenue, and is expected to cross 35% over the next three to four years, as per an ICICI Securities report.ONGC has lined up over ₹77,000 crore of development and infrastructure projects to support output expansion over the coming years. ICICI Securities expects projects in the KG