Oil and Natural Gas Corp Ltd (ONGC) is poised for an operating recovery over the next six to nine months, supported by higher earnings from its core oil and gas production business and a turnaround in its downstream refining operations, S&P Global Ratings said on Monday.
The ratings agency expects ONGC’s consolidated earnings before interest, taxes, depreciation and amortisation (EBITDA) to rise 15-20 per cent to ₹1.3 lakh crore-₹1.4 lakh crore in the financial year ending March 2027, driven primarily by upstream operations benefiting from elevated crude prices.
S&P expects the state-run energy producer to maintain quarterly domestic oil and gas production of about 10 million tonne, equivalent to 73.5 million barrels of oil, supporting quarterly EBITDA of ₹25,000 crore-₹30,000 crore.
The agency assumes Brent crude will average $95 a barrel for the remainder of 2026 before declining to $80 a barrel in 2027. Its forecast implies continued support for ONGC’s exploration and production earnings, although a subsequent decline in oil prices could moderate that contribution.
ONGC’s funds from operations-to-debt ratio could improve to about 60 per cent over the next 12-24 months, providing a substantial cushion against S&P’s 40 per cent threshold for a ‘BBB+’ standalone credit profile.
The report does not constitute a rating action. ONGC’s ratings remain constrained by India’s sovereign credit ratings of BBB/Stable/A-2, S&P said.
The improvement in ONGC’s downstream business is expected to provide an additional earnings boost after losses at its refining subsidiaries weighed heavily on group performance in the June quarter.
Hindustan Petroleum Corp Ltd (HPCL) and Mangalore Refinery and Petrochemicals Ltd (MRPL), ONGC’s downstream subsidiaries, reported combined EBITDA of ₹12,000 crore for the quarter ended September 30, reversing a negative EBITDA of about ₹17,500 crore in the preceding quarter, according to S&P.
The June-quarter performance had been significantly affected by the Middle East conflict, which disrupted energy markets and increased costs across the oil supply chain.
S&P expects improving refining margins and lower losses at HPCL to underpin downstream EBITDA of about ₹17,000 crore in fiscal 2027. Although that would account for only about 13 per cent of consolidated EBITDA, the agency cautioned that significant downstream losses can materially weaken group earnings, as they did in fiscal 2023.
HPCL, one of India’s three major state-run oil marketing companies, is expected to benefit from higher selling prices for refined fuels relative to procurement costs, as well as lower excise duties on fuel sales since March 2026.
The recovery in refining therefore provides a second earnings lever for ONGC, complementing its exposure to upstream oil and gas production.
Despite the stronger earnings outlook, S&P expects ONGC’s consolidated operating cash flow to decline to ₹75,000 crore-₹80,000 crore in fiscal 2027 from ₹1.1 lakh crore in fiscal 2026.
The anticipated decline reflects higher working capital requirements associated with elevated oil and fuel prices, particularly in the downstream business.
Published on October 26, 2026
