Windfall tax: RIL’s refining margins to be hit by upto $8/bbl, say analysts

With the government making it clear that the new windfall tax will also be imposed on special economic zones, Reliance Industries’ gross refining margins (GRMs) will be negatively impacted by $6-8 a barrel, said analysts with Morgan Stanley and Jefferies.

“No sunset date has been specified, though we believe this is an extraordinary measure given the inflated profit environment in refining today. Gasoline and diesel are the key contributors to Reliance’s refining slate contributing 72 per cent of refining throughput. We estimate $7/bbl blended impact on RIL excluding any exemption. With 58 per cent of RIL’s refined products being exported, the blended impact for Reliance could be Rs 3.4 a litre translating to $7 a barrel impact on realized GRM,” a report by Jefferies said