Oil & Natural Gas Corporation has received a credit rating update from ICRA Limited, with the rating agency withdrawing ratings on certain Non-Convertible Debentures while reaffirming others. The development reflects the company's debt management and strong financial position in India's energy sector.

Rating Withdrawal and Reaffirmation Details

ICRA Limited announced on March 19, 2026, the withdrawal of long-term ratings on specific NCD programmes while maintaining ratings on others. The rating agency withdrew the [ICRA] AAA (Stable) rating assigned to ₹500 crore of Non-Convertible Debentures as no amount remains outstanding against the rated instrument. Additionally, ICRA withdrew the long-term rating of [ICRA] AAA (Stable) assigned to the company's unplaced NCD programme of ₹860 crore at ONGC's request.

The rating agency has reaffirmed the long-term rating of [ICRA] AAA (Stable) assigned to the balance NCD programme of ₹8,500 crore. This reaffirmation demonstrates ICRA's confidence in ONGC's creditworthiness and financial stability.

Comprehensive Rating Action Summary

Current Credit Rating Portfolio

ONGC maintains credit ratings from multiple agencies across various instruments. The company's current rating profile includes international and domestic ratings reflecting its strong market position.

Financial Performance and Market Position

ICRA's rating rationale considers ONGC's dominant market position in domestic crude oil and natural gas production, contributing around 63% to India's domestic production. The company's financial performance shows resilience with operating income of ₹663,262 crore in FY2025 and ₹488,442 crore in 9M FY2026.

Strategic Developments and Future Outlook

The rating agency highlighted several strategic developments supporting ONGC's credit profile. The Daman Upside shallow water project is scheduled for commissioning during March-April 2026, with peak production of approximately 5 mmscmd post stabilisation. Multiple fields under DSF II are expected to begin contributing from April 2027.

ONGC's oil and gas production totalled 41.08 MMTOE in FY2025, down 1.68% year-on-year, and 30.64 MMTOE in 9M FY2026, down 0.55% year-on-year. The company maintains proven reserves of approximately 526 MMTOE as of March 31, 2025.

Credit Strengths and Risk Factors

ICRA's assessment recognises ONGC's dominant market position, competitive cost structure, and strong financial position. The company benefits from significant sovereign ownership with a 58.89% Government of India stake and strategic importance in India's energy sector. However, the rating agency notes challenges including reserve replacement difficulties, geological and execution risks inherent in exploration and production activities, and exposure to commodity price volatility.

The withdrawal of ratings on instruments with no outstanding amounts reflects standard industry practice and ICRA's policy on credit rating withdrawal, while the reaffirmation of the ₹8,500 crore NCD programme rating underscores confidence in ONGC's financial strength and market position.

Oil & Natural Gas Corporation faces a mixed outlook as HSBC maintains its cautious stance on the oil and gas major while acknowledging improved earnings potential from higher crude oil prices.

HSBC Rating and Target Price Update

HSBC has maintained its Reduce rating on Oil and Natural Gas Corporation while revising the target price upward. The brokerage firm has raised its target price to ₹240 from the previous ₹200, representing a 20% increase in valuation.

Impact of Higher Crude Oil Prices

The brokerage highlights that crude oil prices around $75 per barrel are creating a favorable environment for Oil and Natural Gas Corporation's earnings. Higher crude oil prices typically benefit upstream oil and gas companies like ONGC as they receive better realizations for their production.

However, HSBC cautions that policy risks may limit the company's ability to capture supernormal profits from the current crude oil price environment. These policy interventions could potentially cap the upside benefits that the company might otherwise realize from elevated oil prices.

Contrasting Impact on Oil Marketing Companies

While higher crude prices benefit upstream companies, HSBC has taken a different stance on Oil Marketing Companies (OMCs). The brokerage has downgraded OMCs to Hold rating, citing the adverse impact of higher crude oil prices on these companies.

The elevated crude oil prices are leading to marketing losses for OMCs and are expected to result in sharp earnings cuts for these companies, creating a challenging operating environment for the downstream oil sector.