The government on Monday reduced the windfall tax on Crude oil to ₹ 1,900 per tonne from ₹ 2,100 per tonne. In addition, it reduced the levy on aviation turbine fuel (ATF) to ₹ 3.5/litre from ₹ 4.5 per litre. The export tax on diesel has been reduced to ₹ 5 per litre from ₹ 6.5 per litre earlier, effective Tuesday.
The windfall tax was introduced in July last year in view of the windfall gains made by domestic crude oil producers and refiners due to high global crude oil prices. These rates are revised every fortnight.
The shares of Reliance Industries gained 1.40% on the National Stock Exchange (NSE) and closed at ₹ 2478.40 apiece. Jefferies has a Buy rating on the shares of the index heavyweight with a price target of ₹ 3100. This translates to an upside of 25.08% as compared to its share price. Jefferies believes that Reliance’s recovery in gross refining margin (GRMs) was ahead of its estimates.
JP Morgan has an overweight rating on the shares of Reliance with a target price of ₹ 3015. This indicates an upside of 21.65% as compared to its current share price. It sees a healthy earnings environment for Reliance.
Reliance Industries is a Fortune 500 company and one of the largest conglomerates in India. Its businesses include energy, materials, retail, entertainment and digital services. It is a blue chip stock with a market capitalization of ₹ 16,05,975 crores.
The company has an ideal debt-to-equity ratio of 0.40 and a return on equity of 8.21%. Its shares were trading at a price-to-earnings ratio of 24.84, which is significantly higher than the industry average of 5.49. This means that it might be overvalued as compared to its peers, or investors are willing to pay a higher price for its shares.
Written by Simran Bafna
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