Oil & Natural Gas Corporation (ONGC), once India's most valuable company, has seen its market capitalization fall behind newer entrants like Zomato, highlighting a significant shift in investor sentiment and market dynamics.

Market Capitalization Comparison

ONGC's current market capitalization stands at ₹3.10 lakh crore, trailing behind:

This represents a stark contrast to ONGC's position in 2012 when it led as India's most valuable company with a market cap of ₹2.44 lakh crore.

ONGC's Growth and Current Ranking

• Growth over 13 years: 26%
• Current rank by market capitalization: 25th

Significant Holdings

ONGC holds substantial stakes in several companies:

The combined value of these holdings exceeds ₹1.07 lakh crore, representing over one-third of ONGC's current market capitalization.

Financial Performance

ONGC has demonstrated strong financial performance:

• Standalone net profit over the last three financial years: ₹1.16 lakh crore
• Dividend payout: ₹12.25 per ₹5 share

In contrast, Zomato reported a net profit of ₹527 crore.

Undervaluation Concerns

Oil Minister Hardeep Singh Puri has noted that state-owned oil PSUs, including ONGC, are significantly undervalued despite their profitability. This discrepancy between financial performance and market valuation raises questions about investor perception and the evolving landscape of India's stock market.

The case of ONGC highlights the changing dynamics in India's corporate landscape, where traditional powerhouses in sectors like oil and gas are being outpaced in market valuation by newer, technology-driven companies. This shift underscores the need for established companies to adapt to changing market preferences and investor expectations in order to maintain their market position.

Oil & Natural Gas Corporation (ONGC), India's state-owned oil and gas giant, has made a significant move in the corporate bond market by providing its first guarantee in 15 years. The guarantee is for a rupee-denominated bond to be issued by its subsidiary, ONGC Petro Additions Ltd (OPAL), this quarter.

Bond Issue Details

OPAL, in which ONGC holds more than a 95% stake, is planning a substantial fundraise through a multiple-tranche bond sale. Here are the key details of the proposed bond issue:

Credit Rating Boost

The guarantee provided by ONGC has significantly enhanced OPAL's credit rating:

This credit rating upgrade is attributed to ONGC's unconditional and irrevocable guarantee, which has bolstered investor confidence in OPAL's bonds.

Historical Context

ONGC's decision to provide this guarantee marks a notable shift in its approach to supporting subsidiary fundraising:

• Last guarantee: January 2010 for ONGC Videsh Ltd bonds
• Current guarantee: First in 15 years

OPAL's Operations

OPAL operates a petrochemical project in Gujarat, highlighting the strategic importance of this fundraising for its operations and potential expansion plans.

Investor Engagement

OPAL is currently in discussions with large state-run investors to act as anchor investors for this bond issue. This move suggests a strategic approach to ensure the success of the fundraising effort and potentially secure favorable terms for the bond issuance.

The bond guarantee by ONGC for OPAL's fundraising initiative underscores the parent company's commitment to supporting its subsidiary's financial needs. This move is likely to have positive implications for OPAL's ability to raise capital at competitive rates, potentially facilitating its growth and operational plans in the petrochemical sector.