INSUBCONTINENT EXCLUSIVE:
Brokerage firms downgraded oil marketing companies (OMCs) as the government announced a Rs 2.50 per litre cut in petrol and diesel prices as
it reduced excise duty by Rs 1.50 a litre and asked oil companies to absorb another Re 1.
Price cut in states like Gujarat and Maharashtra
would be Rs 5 after they matched the announcement with a similar reduction in local sales tax or VAT rates.
Reacting on the announcement,
shares of OMCs extended their losses on Friday
Bharat Petroleum Corporation (BPCL) was trading 25 per cent down at Rs 247.65 while Hindustan Petroleum Corporation (HPCL) and Indian Oil
Corporation (IOC) lost 23 per cent and 19 per cent, respectively at Rs 166.60 and Rs 114.
Global brokerage firm CLSA maintained 's ell' on
It also slashed target price for IOC to Rs 105, from Rs 155 earlier
move will bring down the EPS by 23-46 per cent
It also raised fears of return of subsidy regime if crude spikes further in upcoming elections
policy step makes the entire Indian energy space uninvestable in the near term
However, it cut the target price for IOC and BPCL to Rs 164 (from Rs 254 earlier) and Rs 393 (from Rs 535)
marks a U-turn from deregulation and raises possibility of return of the subsidy regime
The cut in marketing margins would result in 24-28 per cent cut in earnings per share (EPS), Motilal Oswal said.
Goldman Sachs too brought
The global brokerage firm cut target price to Rs 260 (from Rs 470) for BPCL and Rs 170 (from Rs 345) for HPCL
