Upstream companies’ profitability ma take a hit on high windfall oil tax

The recent hike in the windfall tax by the government is likely to impact the profitability of the Indian upstream companies and their cash accruals but will keep their realisations healthy, well in the range of $70-75 per barrel, as per analysts.

“I think the govt has maintained their (upstream companies’) realisations and have not cut deep into it. However, it will impact the profitability of upstream companies and cash accruals. Upside will be lost,” said Prashant Vasisht, Senior Vice President and Co-Group Head, Corporate Ratings, Icra.