Shares of Bharat Petroleum Corporation Ltd (BPCL) were up 2.61% to ₹280.85 in Monday’s early trade, following the government’s decision to raise excise duty on petrol and diesel by ₹2 per litre each. The hike, effective April 8, is expected to generate an additional ₹32,000 crore in tax revenue without impacting retail prices.
According to the Ministry of Finance, excise duties will now be ₹13 per litre on petrol and ₹10 per litre on diesel. The government clarified that retail prices will remain unchanged, as the increase will be adjusted against recent reductions warranted by the fall in international crude oil prices.
Brokerage CLSA noted that the ₹2 hike is modest compared to the US$12-per-barrel drop in crude oil prices over the past few sessions. The firm estimates the duty increase will boost annual government revenue by US$4 billion, with OMCs like IOC, BPCL, and HPCL absorbing the duty hike thanks to healthy marketing margins.
Additionally, the government raised domestic LPG prices by ₹50 per cylinder, which CLSA believes will significantly reduce under-recoveries for state-run oil companies.
Despite the relief, CLSA cautioned that any continued softness in crude (below US$70 per barrel) may prompt retail price cuts, keeping investor sentiment cautious in the short term.
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