Indian upstream sector: The Indian upstream sector is witnessing a surge in investor interest as companies like ONGC and Oil India continue to demonstrate strong potential for growth and value creation.

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Analysts are optimistic about multiple milestones that could further crystallise value in the coming years, driving investor confidence in the sector.

Oil India stands out with the commissioning of expanded capacity at the Numaligarh refinery (NRL) projected for September 2025. Motilal Oswal analysts estimate NRL could generate approximately Rs 2,000 crore annually at the profit after tax (PAT) level in financial year 2024 (FY24). 

Post-commissioning, if NRL achieves a PAT run-rate of Rs 4,500 crore, it could provide major value to Oil India shareholders. 

Additionally, the potential IPO for the refinery and the Indradhanush Gas Grid (IGGL) start-up slated for April 2024 are seen as catalysts for volume growth and market expansion.

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On the other hand, ONGC's potential turnaround at ONGC Videsh Limited (OVL) and the merger of HPCL and MRPL are key factors driving investor interest. ONGC's growth trajectory, however, presents challenges with a more offshore-oriented profile and longer gestation periods for projects.

Investor focus is shifting towards assessing volume growth scenarios, operating costs, and the strength of exploration and development pipelines. While both ONGC and Oil India offer potential value upside, attention is turning towards sustainable growth beyond current valuation discounts.

Analysts maintain a positive outlook on both stocks, reiterating ‘buy’ ratings with target prices of Rs 315 for ONGC and Rs 650 for Oil India.