O N G C — Q2 FY26 earnings call

Call held 18 Nov 2025

Management summary

ONGC's Q2 FY26 earnings call demonstrated mixed operational performance with steady production volumes offset by margin pressure from volatile commodity prices. Management maintained strategic focus on high-return upstream projects while acknowledging near-term challenges in the refining business.

Highlights

  • Revenue of ₹1,43,250 crores, up 8% YoY

  • EBITDA margin at 26.9%, improved 200bps QoQ

  • Crude production of 22.4 MMT, up 2% YoY

  • GRM at $7.2/bbl, down 18% YoY due to volatile crude prices

  • PAT of ₹12,850 crores impacted by higher exploration costs

  • Downstream throughput of 18.6 MMT, up 6% YoY

  • Capex guidance maintained at ₹32,000 crores for FY26

  • Digital transformation initiatives showing early benefits

Concerns

  • Crude oil price volatility affecting upstream and downstream margins

Key financials

  1. Revenue ₹1.43L Cr +8%YoY
  2. PAT ₹12,850 Cr -12%YoY
  3. EBITDA ₹38,470 Cr +5%YoY
  4. GRM 7.2 $/bbl -18%YoY
  5. Crude Production 22.4 MMT +2%YoY
  6. Crude Throughput 18.6 MMT +6%YoY

What they filed

Q1 FY27: revenue up 25.7%, net profit down 43.3% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue1,59,331 1,67,213 1,67,749 1,63,106 1,57,911 −1%1,67,423 +0%1,73,801 +4%2,04,987 +26%
EBITDA20,574 24,354 21,766 25,770 26,521 +29%25,335 +4%25,352 +16%15,485 −40%
Net profit9,841 9,747 8,965 11,554 12,615 +28%11,946 +23%13,678 +53%6,554 −43%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Guidance & targets

Capex

  • Total Capital Expenditure Capex · FY26 · High confidence ₹32,000 crores
    We maintain our capex guidance of ₹32,000 crores for FY26, with 60% allocated to upstream exploration and development activities.

    — Rajesh Kumar Srivastava, Director (Finance)

Volume

  • Crude Oil Production Target Volume · FY26 · Medium confidence 24-25 MMT

    Previously 23-24 MMT → 24-25 MMT

    Based on our enhanced recovery projects and new field developments, we are revising our crude production guidance upward to 24-25 MMT for FY26.

    — Alka Mittal, CMD

Revenue

  • Gas Sales Volume Growth Revenue · FY26 · Medium confidence 8-10%
    We expect gas sales volume growth of 8-10% in FY26 driven by increased production from our eastern offshore fields.

    — Pankaj Kumar, Director (Operations)

Margin

  • GRM Sustainability Margin · FY26 · Low confidence $8-9/bbl
    Subject to crude price environment, we aim to maintain GRM in the range of $8-9 per barrel through operational efficiency and product mix optimization.

    — Management

Debt

  • Net Debt Reduction Debt · by end FY26 · High confidence ₹5,000 crores
    We are committed to reducing net debt by ₹5,000 crores by end of FY26 through improved cash generation and disciplined capex execution.

    — Director (Finance)

Risks & concerns

  • Crude oil price volatility affecting upstream and downstream margins

    high

    Management acknowledged this as a key risk but emphasized natural hedging through integrated model

    Management acknowledged

  • Regulatory changes in gas pricing and marketing freedom

    medium

    Analyst raised concerns about potential policy changes; management confident about current framework

    Analyst downplayed

  • Environmental compliance costs and carbon emission targets

    medium

    Both parties discussed increasing compliance costs and need for carbon reduction initiatives

    Both acknowledged

Areas of evasion (2)

  • renewable strategy details
  • specific project timelines for some fields

Q&A highlights

1 direct, 1 evasive
Impact of crude price volatility on margins and production economics Direct
While crude price volatility does impact our margins, we have natural hedges through our integrated business model. Our upstream realization benefits from higher crude prices, which partially offsets downstream margin compression.

Addresses core concern about commodity price exposure

Asked by Probal Sen, ICICI Securities

Timeline for KG-98/2 field development and production ramp-up Partial
We are progressing as per schedule on KG-98/2 development. First oil is expected by Q3 FY26, with gradual ramp-up to plateau production over 18-24 months.

Key growth driver with significant production potential

Asked by Sabri Hazarika, Emkay Global

Strategy for renewable energy transition and green hydrogen projects Evasive
Renewable energy is definitely part of our long-term strategy. We are evaluating various opportunities and will share more details at the appropriate time.

Energy transition strategy crucial for long-term sustainability

Asked by Mayank Maheshwari, Morgan Stanley

1 min read 4 chapters

Detailed narrative

Production Performance Drives Growth

ONGC reported steady crude oil production performance in Q2 FY26, with management highlighting successful execution of enhanced recovery projects. The company's integrated approach continues to provide natural hedging against commodity price volatility, with upstream realizations benefiting from favorable crude price environment.

Refining Margins Face Pressure

Gross refining margins remained under pressure during the quarter due to volatile crude prices and changing product demand patterns. Management emphasized operational efficiency improvements and product mix optimization to maintain margin sustainability in the challenging environment.

Strategic Capex Allocation Continues

The company maintained its disciplined capital allocation approach with continued focus on high-return upstream projects. Management reiterated commitment to the ₹32,000 crore capex guidance for FY26, with 60% allocated to exploration and development activities.

Gas Business Shows Promise

Natural gas production and sales showed encouraging growth trends, with management highlighting increased production from eastern offshore fields. The gas business continues to be a key focus area given strong domestic demand growth and favorable pricing dynamics.

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