O N G C (ONGC)

FairStock Score: 90/100 — HIGH CONVICTION

Score breakdown: P/E: 3/3 · ROCE: 1/2 · Growth: 2/2 · Dividend: 1/1

Key Financials

Strengths

• Trading at ₹286.25 against book value of ₹292.35, giving P/B of 0.98 and P/E of 9.26, with Graham Number ₹445.26 implying a 37.18% margin of safety.
• Strong free cash flow of ₹47,967 Cr and moderate debt/equity of 0.48 provide financial flexibility.
• Profit grew 11.15% despite a -1.26% sales decline, and Piotroski F-Score of 7/9 indicates solid fundamentals.
• Dividend yield of 4.38% and promoter holding of 58.89% offer income and ownership alignment.

Concerns

• Oil exploration is inherently cyclical; current sales growth is negative at -1.26%, and earnings will remain sensitive to crude prices.
• Current ratio of 0.94 is below 1, suggesting tight short-term liquidity.
• Altman Z-Score of 2.21 sits in the grey zone and does not give a clean safety signal.
• Reported EV/EBITDA of 180.22 is sharply out of line with the P/E of 9.26 and needs explanation before relying on the cheap valuation.

AI Analysis

Let me look at ONGC the way I'd look at any business: what does it earn, how certain are those earnings, and what am I paying? On the surface, the price is not demanding. At ₹286.25, I pay less than book value of ₹292.35, only 9.26 times earnings, and I collect a 4.38% dividend while waiting. The Graham Number of ₹445.26 gives me over 37% cushion against my own mistakes. That is the kind of arithmetic Graham taught us to love. But this is a cyclical, commodity business, and Mr. Market's mood swings with crude oil. Latest quarter sales of ₹1.67 lakh crore and net profit of ₹11,946 crore are fine, but annual sales dipped 1.26% while profits rose 11.15%—a reminder that margins, not just volume, drive the story. The 58.89% promoter holding gives it a quasi-sovereign moat; no private player can replicate that. Free cash flow of ₹47,967 crore and debt/equity of 0.48 are healthy, and the Piotroski score of 7 out of 9 tells me the balance sheet is not deteriorating. What do I worry about? A current ratio of 0.94 is a bit thin. The Altman Z-score of 2.21 sits in a grey zone. And the reported EV/EBITDA of 180.22 is so out of line with the P/E that I would want that mystery explained before committing capital. DCF says intrinsic value ₹1,112, but I treat precise DCF outputs as fairy tales; they depend on oil prices I cannot predict. In summary, ONGC is a respectable cyclical asset play, not a wonderful growth machine. I won't overpay, but at 0.98 times book with a solid dividend and strong cash flow, it passes my margin-of-safety test.

Data from BSE/NSE filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer