This Maharatna PSU stock offers 4.3% dividend yield amid ambitious Rs 2 lakh cr green push

Oil and Natural Gas Corporation Ltd (ONGC), India’s leading energy major and a Maharatna public sector undertaking (PSU), is undertaking an ambitious Rs 2 lakh crore green transition even as it maintains its dominance in the country’s hydrocarbon space.

The company accounts for over 60 per cent of India’s total hydrocarbon production, contributing around 70 per cent of domestic crude oil output and over 50 per cent of natural gas production, underlining its strategic importance to the nation’s energy security.

Strong operational scale

ONGC operates at a significant scale with 268 offshore installations, 69 drilling rigs, and a pipeline network exceeding 25,500 kilometres. In FY25, its standalone crude oil production stood at 18.558 MMT, while natural gas output was 19.654 BCM.

The company continues to strengthen its resource base through exploration. In FY25, it reported 9 new hydrocarbon discoveries — 5 onland and 4 offshore — and monetised 8 discoveries. It also secured 15 new contract areas under OALP Bid Round-IX, covering 82,560.26 square kilometres.

Alongside its core operations, ONGC is sharpening its focus on sustainability, with a planned investment of Rs 2 lakh crore to achieve Net Zero Scope-1 and Scope-2 emissions by 2038. The company also benefits from diversified exposure through subsidiaries and strategic investments such as ONGC Videsh, HPCL, MRPL, and ONGC Petroadditions.

Financially, FY25 performance was impacted by softer crude oil prices. Standalone revenue declined 0.4 per cent to Rs 1,37,846 crore, primarily due to a drop in crude realisation to $76.9 per barrel from $80.8 in FY24. PBIDT fell 2.4 per cent to Rs 75,716 crore, though margins remained strong at 54.9 per cent. Net profit declined 12.1 per cent to Rs 35,610 crore.

The trend continued in 9M FY26, with revenue down 6.1 per cent year-on-year to Rs 96,581 crore. Operating profit fell 4.3 per cent to Rs 49,056 crore, with margins at 50.8 per cent, while net profit declined 10 per cent to Rs 26,244 crore.

Robust cash flows support dividend payouts

Despite earnings pressure, ONGC’s cash flow generation remains strong. Net operating cash flow rose to Rs 73,010 crore in FY25 from Rs 65,335 crore in FY24. The company maintains a healthy balance sheet, with a current ratio of 1.4:1, working capital of Rs 15,088 crore, cash and bank balances of Rs 15,495 crore, and it remains debt-free.

This financial strength underpins consistent shareholder returns. ONGC distributed Rs 15,411 crore as dividends in FY25, with a payout ratio of 43.27 per cent, and has already matched this amount in the first nine months of FY26 through interim dividends.

The company paid Rs 12.25 per share in FY24 and has matched this in FY26 year-to-date (YTD), translating into a dividend yield of about 4.26 per cent at a share price of Rs 287.50 (Monday’s closing price). Earlier dividends stood at Rs 11.25 in FY23, Rs 10.5 in FY22, and Rs 8.60 in FY21.

ONGC’s outlook remains closely tied to global crude prices and the policy environment, including potential government interventions such as windfall taxes.