Government Expresses Disappointment Over Market Valuation of State-Run Oil Firm

The Government of India has expressed disappointment over the current market valuations of state-run oil companies, stating that their stock prices do not reflect their strong fundamentals, profitability, and strategic importance in the energy sector.

Senior officials from the Ministry of Petroleum and Natural Gas and Department of Investment and Public Asset Management (DIPAM) noted that despite strong operational performance, record profits, and consistent dividends, several Public Sector Undertakings (PSUs) in the oil and gas sector — including ONGC, Indian Oil Corporation (IOC), Bharat Petroleum (BPCL), and Oil India — continue to trade at discounted valuations compared to global peers.

Officials highlighted that these companies have played a crucial role in maintaining energy security, investing heavily in exploration, refining, and infrastructure, while balancing social obligations like fuel price stability.

“The market has not rewarded these companies adequately despite robust earnings, healthy balance sheets, and government support for growth,” a senior official said.

The government believes that factors such as policy uncertainties, regulatory interventions, and investor perception about subsidies or price controls may be contributing to the undervaluation. Officials also pointed out that global energy transition concerns and focus on renewables might be overshadowing the near-term profitability of these firms.

The Centre is now exploring ways to enhance investor confidence, which could include greater transparency, strategic disinvestment, or listing of subsidiaries to unlock value.

This development comes at a time when oil PSUs have posted record profits due to strong refining margins and higher product demand. For instance, ONGC and IOCL recently reported significant jumps in quarterly earnings, backed by favorable market conditions.

Despite these results, their stocks remain traded below book value, raising concerns about market inefficiency and investor sentiment.

Analysts suggest that a clear roadmap on energy transition, policy consistency, and improved corporate governance could help bridge the valuation gap and attract long-term investors.