Shares of Oil India Ltd. rose over 2% on Thursday after it fell over 10% in intraday trade on Wednesday. The stock recovered after 13% loss over the past five sessions to trade at Rs 433 apiece on Thursday.
Government has announced an increase in the royalty rate on onshore crude oil production after the cut announced about a month ago. The move partially reverses the earlier reduction which shows an attempt to rebalance revenues without fully restoring the previous levy.
The new effective royalty rate of 13.33% on crude production from onshore fields is higher than the 10% announced on 8 May, but this is still lower than the 16.67% rate that was applicable before. The revision suggests a calibrated approach by the government, keeping rates below historical levels while addressing fiscal considerations.
Brokerage firm CLSA said the change could hit EPS of ONGC/Oil India by 2% and 9%, respectively, indicating a relatively sharper impact on Oil India's earnings profile compared to ONGC. The brokerage flagged that while the increase raises cost pressures, the overall financial hit remains contained.
The brokerage sees this as a one-off tweak to protect state government revenues, rather than the start of a structural shift in policy. It added that the adjustment is unlikely to materially alter the long-term outlook for upstream players.
For Oil India, the brokerage expects it to report a notable jump in production in its June quarter results, which could help offset the earnings impact from the higher royalty rate.
Oil India Ltd. Share Price Today
Oil India Share Price Today
The scrip rose as much as 2.49% to Rs 433 apiece intraday on Thursday at 9:35 am. This compares to a 0.49% fall in the NSE Nifty 50 Index.
It has fallen 7.91% in the last 12 months but has risen 1.05% year-to-date. Total traded volume so far in the day stood at 6.08 times its 30-day average. The relative strength index was at 37.51.
Out of 22 analysts tracking the company, 14 maintain a 'buy' rating, six maintain a "hold", and two maintain a "sell" rating, according to Bloomberg data. The average 12-month consensus price target of Rs 552.76 implies an upside of 29.3%
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