Oil prices may continue to fluctuate, and energy stocks have remained under pressure in recent months. In the latest report, Motilal Oswal, has maintained its ‘Buy’ rating on ONGC with a target price of Rs 290. This translates to an upside potential of around 21% from the current market price. Let’s take a look at the key reasons why the brokerage house is bullish on this oil & gas sector stock – In the Q1FY27 earnings, ONGC’s standalone revenue stood at around Rs 46,500 crore. As per Motilal Oswal’s report, this was broadly in line with their estimates. Furthermore, the brokerage report noted that crude oil and natural gas sales, however, came in lower than expected. Similarly, oil sales were nearly 9% below estimates, while gas sales were around 8% lower. Crude oil production remained largely unchanged compared with the previous quarter but declined 6% year-on-year. Natural gas production also slipped marginally. Even with lower production, profitability surprised on the positive side. Operating earnings stood at nearly Rs 29,500 crore, while adjusted profit after tax was around Rs 17,000 crore, both exceeding the brokerage’s expectations. According to Motilal Oswal, one of the biggest positives was the continued rise in contribution from New Well Gas (NWG). The report noted, “New well gas contribution continues to increase, with volume share rising to 24% in Q1FY27 (vs. 17% in FY26).” The brokerage also highlighted that NWG contributed nearly Rs 4,000 crore in revenue during the quarter and generated around Rs 1,900 crore of additional realisation over the Administered Price Mechanism (APM) pricing. Apart from this, ONGC has also started drilling an exploratory well under the Samudra Manthan initiative in the Mahanadi deep-water block. Another positive came from ONGC Videsh (OVL), the company’s overseas exploration arm. According to the brokerage report, “OVL reported PAT of 2,940 crore in the last 2 quarters vs. 1,220 crore in FY26.” Motilal Oswal in its report noted that crude oil and gas production continued to remain under pressure due to reservoir-related issues and project shutdowns. Referring to the ONGC leadership views, the report also pointed out that the, “Management has guided for flat YoY standalone volumes in FY27.” Another concern remains ONGC Petro additions Limited (OPaL), which reported another quarterly loss as higher feedstock costs affected profitability. The brokerage believes the market may be undervaluing ONGC. It said, “ONGC currently trades at 5.7x FY28E consol. P/E, below its long-term average one-year forward P/E of 6.4x.” As per the brokerage report, after adjusting for the value of listed investments and ONGC Videsh, the core business appears to be pricing in a much lower crude oil assumption than current industry conditions suggest. ONGC shares declined more than 1% in the intraday trading session today. The stock has fallen nearly 3% over the past one month and around 12% over the last six months. Over the past year, however, ONGC shares managed to gain around 1%, while remaining largely flat so far in 2026. With a market capitalisation of nearly Rs 2.98 lakh crore, the stock currently trades at a price-to-earnings ratio of 7.2. Disclaimer: This article presents third-party brokerage coverage and market commentary for informational purposes only and does not constitute financial advice, an offer, or a solicitation to buy or sell securities. Investment ratings, price targets, and upside projections reflect the analytical views of the cited brokerage firm and are subject to market risks, sector volatility, and changing economic conditions. Readers should not rely on this information as a substitute for independent research or personal investment planning. You are strongly advised to consult a SEBI-registered financial advisor before making any investment decisions. This disclaimer has been generated using AI to support user well-being and responsible content consumption.