Is ONGC overvalued or undervalued?

As of 23 August 2024, ONGC's valuation grade has moved from attractive to very attractive, indicating a significant improvement in its perceived value. The company is currently assessed as undervalued. Key ratios supporting this conclusion include a PE ratio of 8.31, an EV to EBITDA of 4.65, and a Price to Book Value of 0.90, all of which are notably lower than its peers.
In comparison, Reliance Industries, which is rated fair, has a PE ratio of 28.05, while IOC and BPCL, both rated very attractive, have PE ratios of 16.67 and 10.09, respectively. This suggests that ONGC is trading at a substantial discount relative to its industry peers. Additionally, ONGC's dividend yield of 5.74% further enhances its attractiveness to investors. Despite a recent underperformance compared to the Sensex over the past year, the long-term outlook remains positive, with a 5-year return of 170.28% compared to the Sensex's 142.99%.