Indian Oil Corporation Ltd (IOC) shares gained 2.08% to ₹130.75 in Monday’s trade after the government raised excise duty on petrol and diesel by ₹2 per litre, providing a revenue boost for the government while keeping retail prices unchanged.
The government’s decision, which took effect on April 8, 2025, raises petrol excise to ₹13/litre and diesel excise to ₹10/litre. Despite the hike, consumers won’t bear the brunt, as the increase will be absorbed by oil marketing companies (OMCs) such as IOC, BPCL, and HPCL—thanks to improved marketing margins due to a recent drop in global crude oil prices.
Brokerage CLSA estimates this tax change will generate about US$4 billion annually in additional revenue for the Indian government. The excise hike is viewed as modest, equivalent to a US$4/bbl crude rise, compared to the US$12/bbl fall in global prices seen in the last few sessions.
In addition, the Centre also hiked domestic LPG prices by ₹50 per cylinder, a move expected to reduce current under-recoveries on LPG and support OMC profitability in the near term.
While the outlook remains stable for now, CLSA warned that retail price cuts could follow if crude prices stay below US$70/bbl, which may add pressure on margins going forward.
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