The government’s latest diktat to cut windfall tax on petrol, diesel and jet fuel is likely to benefit India’s biggest conglomerate – Reliance Industries – at two levels.
Firstly; RIL is one of the two private players, accounting for a major chunk of the country’s overall fuel exports.
Secondly, the Mukesh Ambani-led company runs India’s only export-focused refining unit in Gujarat’s Jamnagar.
Thus, the decision to remove levies on exports from refineries located in Special Economic Zone, will give a leg up to RIL.
Nirav Karkera, Head – Research, Fisdom says oil refining business is extremely sensitive to taxes. Windfall tax could have hit RIL’s bottom-line by 30-40%. This tax cut is likely to support healthy margins. The move also lends support to refining biz’s cash flows, says Karkera.
While, fundamentally, the developments will support the stock, it is seeing resistance at 200-day moving average as per technical charts.
Reliance Industries shares are hovering around 200-DMA of 2,507 rupees. Only a decisive move above this level would push the stock towards a level of 2,700 rupees.
Meanwhile, the company will release its June quarter report card later today. According to analysts, RIL will likely report a strong set of numbers for Q1FY23, driven by robust oil earnings.
According to Mayuresh Joshi, Head of Equity Research, William O’Neil India, the refining biz is likely to show ‘supernormal’ profit. Singapore gross refining margin averaged at $23-24 in Q1. However, recent fall in Singapore GRM raises question of sustainability.
Joshi says Reliance Retail, Jio are to see sustained recovery. Volume and value growth to continue, and Jio is likely to remain strongest standalone biz. Improvement in ARPU will be positive, he says.
Overall, Bloomberg’s consensus estimate pegs consolidated net profit at 21,615 crore rupees on net sales of 2.25 trillion rupees. Ebitda is seen around 38,500 crore rupees.
Meanwhile, Bandhan Bank, Coforge, HDFC AMC and JSW Steel are other major companies due to report their Q1 results today.