Motilal Oswal has set a price target of ₹290 for shares of Oil and Natural Gas Corporation (ONGC), with the brokerage identifying three triggers that it expects to support the state-owned oil and gas producer's stock.

In its assessment, the brokerage said ONGC's risk-reward remains attractive, pointing to three factors:

• High dividend yields
• A constructive outlook for crude prices
• Improving prospects at ONGC Videsh Ltd. (OVL), the company's overseas arm

The crude price view bears directly on ONGC's economics: as a producer, the company's realisations on its output move with global benchmarks, tying revenue and margins to the price outlook the brokerage describes as constructive. The dividend trigger, meanwhile, aligns with ONGC's standing among India's higher-yielding state-owned stocks, where payouts also flow to the government, the company's majority shareholder.

ONGC is India's largest oil and gas exploration and production company and a Maharatna public sector undertaking under the Ministry of Petroleum and Natural Gas. The company accounts for the bulk of India's domestic crude oil output, and its shares trade on the National Stock Exchange and BSE under the ticker ONGC. That production role carries strategic weight in a country that imports the bulk of the crude oil it consumes, and ONGC's output levels are watched as one gauge of India's energy position.

ONGC Videsh, the subject of one of the three triggers cited by the brokerage, functions as ONGC's international investment arm and holds interests in oil and gas assets across multiple countries. Because OVL's overseas projects consolidate into ONGC's results, the trajectory of that portfolio feeds directly into the parent company's performance.

The variables that will indicate how these triggers develop are ONGC's periodic production and realisation figures, its dividend declarations, and global crude price movements — the inputs behind the brokerage's assessment.

Motilal Oswal Financial Services is an Indian financial services firm whose equity research covers a broad range of domestic companies, including state-owned enterprises.

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Source: CNBC-TV18