Reliance Industries Ltd (RIL) shares on Friday afternoon nosedived after the Finance Ministry notified new duties on the export of petrol, diesel and aviation turbine fuel (ATF) in a bid to curb windfall to private refiners and boost domestic supply.
At 11:24 am, RIL stock was seen trading at Rs 2,444.55, slipping Rs 151.10 or 5.82% on Friday as investors scrambled to assess the impact of new taxes on the oil refiner.
The stock touched an intra-day high of Rs 2,592 and a low of Rs 2370.10 on the National Stock Exchange (NSE).
The Nifty heavyweight also dragged the benchmark lower by almost 140 points intra-day after the government said a duty of Rs 6 per litre on the export of petrol, Rs 13 per litre on diesel exports and Rs 1 per litre on Aviation Turbine Fuel (ATF) will be levied, along with an additional Rs 23,250 per tonne tax on domestically produced crude oil.
However, refiners who produce fewer than 2 million barrels have been exempted from the new duties. Also, the government will not levy the new taxes on domestic production higher than last year in order to not incentivise producers to boost local supply.
Sushil Choksey of Indus Equity Advisors told ET Now it is too early to calculate the actual impact of the new development on the price share of RIL; however, it is important to remember that RIL’s Jamnagar refinery was accorded EOU or Export-Oriented Unit status and was set up as an SEZ, which translates into tax exemptions and relief for the company.
He further added the profits made by RIL in Q1 alone are enough for the year made possible by a mix of discounted Russian crude and International prices.
“In a worst-case scenario, the stock may have an impact of 10% due to the new tax announcement. Super-abnormal profits of $25 may go down to $15-17 but even those are historically high for the last 10 years,” he added.
“RIL processes 1.3 million barrels of crude per day with an annual capacity rate of 72 million tonnes. One of the refineries was set up as an EOU-SEZ. The impact will be decided based on the quantum of diesel and petrol exports by RIL. The company exported more due to the recent price distortion between the domestic and international market. The company can always tweak which products to export in order to minimise impact,” Choksey further said.
