ONGC Valuation Shift Signals Renewed Price Attractiveness Amid Sector Dynamics

Valuation Metrics: A Closer Look

As of 10 Feb 2026, ONGC’s P/E ratio stands at 9.15, a figure that remains comfortably below the industry heavyweight Reliance Industries’ P/E of 23.75, signalling a relatively cheaper valuation. However, it is slightly higher than peers such as Indian Oil Corporation Ltd. (IOCL) and Bharat Petroleum Corporation Ltd. (BPCL), which hold very attractive P/E ratios of 6.95 and 6.7 respectively. This suggests that while ONGC is no longer the cheapest in the sector, it still offers a compelling valuation relative to the broader oil industry.

The price-to-book value ratio of 0.91 further underscores ONGC’s attractive valuation. Trading below book value often indicates undervaluation, and ONGC’s P/BV remains below the critical threshold of 1.0, which is generally considered a sign of price attractiveness. This contrasts with Reliance Industries, which trades at a premium P/BV, reflecting its diversified business model and higher growth expectations.

Enterprise value to EBITDA (EV/EBITDA) is another key metric where ONGC shines with a ratio of 4.65, significantly lower than Reliance’s 11.91. This metric highlights ONGC’s operational efficiency and cash flow generation relative to its enterprise value, reinforcing its appeal to value-focused investors.

Comparative Peer Analysis

When benchmarked against its peers, ONGC’s valuation profile presents a balanced picture. IOCL and BPCL maintain very attractive valuations, with EV/EBITDA ratios of 5.68 and 5.22 respectively, slightly higher than ONGC’s 4.65. This positions ONGC as competitively priced within the oil sector, especially considering its robust operational metrics.

Reliance Industries, while commanding a premium valuation, operates in a different league with diversified revenue streams beyond oil and gas exploration, justifying its higher multiples. ONGC’s focused oil sector exposure, combined with its attractive valuation, makes it a distinct proposition for investors seeking direct oil sector plays.

Historical Valuation Context

Historically, ONGC’s valuation has oscillated between very attractive and attractive grades, reflecting cyclical oil price movements and sector sentiment. The recent upgrade from a very attractive to an attractive valuation grade on 5 Feb 2026 indicates a modest re-rating, likely driven by improved earnings visibility and operational performance.

Despite this upgrade, the P/E ratio remains below the long-term average for large-cap oil companies, suggesting that the stock has not yet fully priced in potential upside. The EV to capital employed ratio of 0.93 and EV to sales ratio of 0.70 further reinforce the stock’s undervaluation relative to its asset base and revenue generation capacity.

Operational Efficiency and Returns

Beyond valuation, ONGC’s return metrics provide additional insight into its investment appeal. The company’s return on capital employed (ROCE) stands at 12.55%, while return on equity (ROE) is 9.97%. These figures indicate efficient capital utilisation and reasonable profitability, supporting the case for a sustained attractive valuation.

Dividend yield at 2.77% adds to the stock’s appeal, offering income-oriented investors a steady return alongside capital appreciation potential. This yield is competitive within the oil sector, balancing growth and income considerations.

Price Performance and Market Sentiment

ONGC’s current market price is ₹266.70, slightly down from the previous close of ₹268.70, with intraday trading ranging between ₹265.80 and ₹270.85. The stock’s 52-week high is ₹277.80, while the low stands at ₹205.00, indicating a relatively narrow trading band and reduced volatility in recent months.

Performance comparisons with the Sensex reveal ONGC’s strong relative returns over multiple time horizons. The stock has outperformed the benchmark over one week (5.00% vs 2.94%), one month (13.93% vs 0.59%), year-to-date (11.01% vs -1.36%), three years (82.42% vs 38.25%), and five years (164.06% vs 63.78%). However, over the past year, ONGC’s 7.11% return slightly trails the Sensex’s 7.97%, and over ten years, the Sensex’s 249.97% gain dwarfs ONGC’s 83.17%.

Mojo Score and Rating Upgrade

MarketsMOJO’s proprietary scoring system assigns ONGC a Mojo Score of 74.0, reflecting a strong buy sentiment. This score underpins the recent upgrade in the Mojo Grade from Hold to Buy on 5 Feb 2026, signalling increased confidence in the stock’s prospects. The Market Cap Grade remains at 1, indicating ONGC’s status as a large-cap stalwart with significant market presence and liquidity.

The upgrade in valuation grade from very attractive to attractive suggests a recalibration rather than a deterioration, implying that while the stock has appreciated in value, it remains a compelling investment opportunity relative to its fundamentals and peers.

Investment Implications

For investors, ONGC’s current valuation metrics present a nuanced opportunity. The stock trades at a discount to Reliance Industries and remains competitively priced against other oil sector peers such as IOCL and BPCL. Its solid operational returns, reasonable dividend yield, and strong relative price performance over medium-term horizons enhance its appeal.

However, the slight downgrade in valuation grade from very attractive to attractive warrants cautious optimism. Investors should monitor sectoral developments, crude oil price trends, and ONGC’s earnings trajectory to gauge whether the stock can sustain or improve its valuation premium.

Given the company’s strategic importance in India’s energy landscape and its robust financial health, ONGC remains a key stock for value-oriented portfolios seeking exposure to the oil sector.

Conclusion

ONGC’s valuation shift reflects a market reassessment amid evolving fundamentals and sector dynamics. While no longer rated as very attractive, the stock’s attractive P/E, P/BV, and EV/EBITDA ratios, combined with solid returns and dividend yield, maintain its status as a compelling investment within the oil sector. The Mojo Score upgrade to Buy further reinforces this positive outlook, making ONGC a stock to watch for investors seeking value and stability in a cyclical industry.

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