ONGC, Oil India, MRPL, Chennai Petro gain up to 5% after windfall tax cut by Govt | News Bharat

ONGC, Oil India, MRPL, Chennai Petro: Energy stocks such as Oil and Natural Gas Corporation (ONGC), Oil India Limited (OIL), Mangalore Refinery & Petrochemicals (MRPL) and Chennai Petroleum Corporation jumped up to 5 percent on the BSE . intraday in morning trading on Friday.

The increase in shares of energy companies (upstream companies) could be mainly attributed to the government’s move to lower the tax on windfall profits from domestically produced crude oil and lower the duty on diesel fuel.

Individually, shares of MRPL were the top gainers of over 5 percent to Rs 61.2 per share, followed by Chennai Petro shares of over 4 percent to Rs 221.95 apiece. Shares of ONGC and Oil India rose over 3 percent to Rs 144.75 and Rs 214.1 per share, respectively, on the BSE.

Read also: Tax on extraordinary profits from crude oil halved, duty on diesel exports too reduced

The tax on crude oil produced by companies such as state-owned ONGC has been reduced to Rs 4,900 per tonne from the existing Rs 10,200 per tonne, according to a government notification issued on Thursday, news agency PTI reported.

In a fortnight’s revision of windfall tax, the government has reduced the diesel export rate from Rs 10.5 per liter to Rs 8 per litre. The levy includes Rs 1.5 per liter as road infrastructure levy.

Global oil and gas brokerage CLSA, bullish on the oil and gas sector, said a cut in the tax on domestic crude windfalls of <$10 a barrel had dented Brent over the past fortnight. This kept the realization of crude oil after the unexpected taxes at $78 a barrel, the brokerage house added.

See also: Government cuts windfall tax on domestic crude oil, raises taxes on ATF and diesel

According to CLSA, the realization is near the upper end of the USD 74-79 per barrel range of the last few resets, while ONGC/OIL share prices suggest realization of USD 45-50 per barrel.

Probal Sen, research analyst at ICICI Securities, which reported a healthy second-quarter profit for the current financial year, with operating profit improving on sharply higher oil and gas realization, at maintaining a BUY stance on OIL and ONGC with a target of Rs 267 and Rs 195 per share, respectively.

India introduced windfall taxes for the first time on July 1, joining a growing number of countries taxing the super-normal profits of energy companies. A windfall tax of Rs 23,250 per tonne ($40 per barrel) of domestic crude oil production was also levied.

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