Shares of ONGC and Oil India were seeing opposite fortunes on the bourses on Thursday, but analysts were upbeat on prospects for both public sector oil explorers.

What Happened: Motilal Oswal reaffirmed its “buy” recommendation on both stocks, setting a target price of ₹315 for ONGC and ₹650 for Oil India.

Analysts at Motilal Oswal’s said ONGC and Oil India have demonstrated strong value potential in recent months, driven by robust production growth expectations.

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Over the past year, ONGC’s stocks have surged around 77%, while Oil India has almost doubled.

The Thesis: Analysts at Motilal Oswal anticipate a further 15-20% “value upside” in both stocks, as investor focus shifts towards evaluating volume growth prospects, scrutinising operating costs and assessing the strength and visibility of the exploration and development pipeline, rather than just valuation. This shift in focus could potentially trigger a rerating, the brokerage said.

While maintaining a positive outlook on both stocks, analysts favour Oil India over ONGC due to its exposure to the refining upcycle facilitated by its stake in Numaligarh Refinery Limited, as well as its higher core oil and gas volume growth. Conversely, ONGC faces more growth challenges, primarily relying on offshore-oriented projects with longer gestation periods, the report said.

Price Action: ONGC’s share price was down 0.71% at ₹271 around noon on Thursday while Oil India’s shares climbed 3.5% to ₹605.65.

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