The government’s quicker-than-expected cut in windfall tax on fuel exports should “normalize equity multiples” of Reliance Industries and state-owned ONGC (Oil and Natural Gas Corporation), analysts at Morgan Stanley said on Wednesday. Besides, they see ONGC earning profit per barrel worth $25, which is 20 per cent higher over last year’s profit.
“RIL’s gross refining margins (GRM), is currently near $13 per barrel, i.e. near upcycle margins, as reduction in fuel margins is cushioned by lower crude official selling price (OSPs). ONGC, meanwhile, is seeing profit/bbl at$25, i.e. 20 per cent above last year’s levels. More importantly, the move lowers investor concerns on a potential downgrade cycle for the stocks in a recessionary demand environment,” Morgan Stanley said.
