Kotak Slams Oil India Valuation Premium as 'Indefensible'
Kotak Institutional Equities has questioned Oil India's valuation premium over ONGC, citing that it appears 'indefensible'.
The brokerage notes that despite both companies benefiting from higher global crude and gas prices, ONGC has underperformed Oil India by 15 percentage points since the end of February 2026. Over the past three months, Oil India shares have gained 14%, in comparison to ONGC's 4% decline.
Kotak attributes Oil India's sharp outperformance partly to the broader preference for mid-cap stocks over large-caps, with dedicated mid-cap and small-cap mutual funds accounting for 32% and 42%, respectively, of equity-oriented fund flows in the eight months through August 2026. Additionally, Oil India has a near-term volume advantage, with Kotak expecting it to deliver stronger crude oil volume growth than ONGC in FY27.
However, Kotak also points out that ONGC has a stronger long-term production and earnings outlook, citing its higher reserves-to-production ratios for both oil and gas. At the end of FY26, ONGC's oil reserves-to-production ratio stood at 13.6 times, compared with 8.3 times for Oil India.