Oil and gas stocks to buy: ONGC vs Oil India shares - Kotak Securities raises FY27 forecast to $100; know preferred pick
India's upstream oil and gas producers could benefit from higher crude prices, with the West Asia conflict and persistent supply disruptions keeping energy markets volatile. Against this backdrop, Kotak Institutional Equities has raised its FY27 crude oil price assumption to $100 per barrel from $90per barrel, while retaining its FY28 and long-term forecasts at $75 per barrel.
Dated Brent crude has averaged $126 per barrel so far in October and $104 per barrel to date in FY27, according to the brokerage. Although oil flows through the Strait of Hormuz have recovered significantly, renewed attacks on Saudi infrastructure and oil tankers have heightened concerns over potential supply disruptions. Crude and product tanker rates have also climbed to multi-year highs.
The brokerage believes the policy environment for domestic upstream companies has improved following amendments to the Oilfields (Regulation and Development) Act, royalty reforms and the government's Samudra Manthan initiative. It also highlighted the favourable pricing framework for gas from new wells, linked to 12% of Brent crude prices.
ONGC remains the brokerage's preferred pick in the upstream oil and gas space, supported by a stronger medium-term production outlook, improving gas realisations and attractive valuations.
Despite earlier setbacks at its KG-DWN-98/2 asset, ONGC's outlook is improving, with higher realisations from new-well gas and production growth from new fields expected to support performance. Its technical service partnership with BP for the Western Offshore asset, which accounts for around 70% of its production, is also expected to strengthen the medium-term outlook.
In contrast, Oil India's limited reserves could constrain oil production after a near-term ramp-up, while weak oil and gas realisations have weighed on its overall margins. However, its gas production outlook remains relatively better, the brokerage noted.
Kotak Institutional Equities has raised its FY27 earnings estimates for both companies by 16–17%, driven by higher crude oil and new-well gas realisations. Its FY28 and FY29 earnings-per-share estimates have been revised marginally higher due to increased other income, while volume assumptions remain unchanged.
The brokerage has reiterated its Buy rating on ONGC and raised its fair value to ₹360 per share from ₹355 earlier. Against the 27 October closing price of ₹230, this implies an upside potential of around 57%.
For Oil India, it has maintained its Sell rating and increased its fair value estimate to ₹365 from ₹360. Compared with the 27 October closing price of ₹457, the revised target implies a downside of around 20%.
ONGC therefore remains the brokerage's preferred upstream stock, with its production outlook, improving realisations and valuation comfort underpinning the preference.
Dhanya Nagasundaram works as a Content Producer at LiveMint, specializing in news related to financial markets, stocks, and business. With over eight years of experience in journalism and content creation, she has honed her skills in data-driven reporting and market analysis. Her focus is on monitoring stock trends, initial public offerings (IPOs), corporate news, policy shifts, and larger economic trends that affect investors and market players. <br><br> At LiveMint, Dhanya consistently writes and produces articles that make complex financial topics accessible to readers. She keeps a close eye on equity markets, commodities, and macroeconomic indicators, assisting audiences in comprehending how global and domestic events influence investment perspectives. Her stories frequently underscore emerging trends within sectors, the IPO market, company earnings results, and market strategies pertinent to both retail and institutional investors. <br><br> Before her tenure at LiveMint, Dhanya accumulated a wealth of professional experience at various companies, including MintGenie, Informist, Cogenics, Chary Publications, KPMG, and the Royal Bank of Scotland. These positions allowed her to establish a solid foundation in financial research, reporting, and content creation. <br><br> Throughout her career, she has explored numerous subjects such as trading strategies, commodities, IPOs, wealth generation, corporate profits, and macroeconomic indicators. Her background in both financial journalism and corporate settings has given her the ability to tackle stories with analytical rigor while ensuring clarity for her audience. Through her contributions, Dhanya strives to deliver insightful, trustworthy, and investor-centric financial content.
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