By Malvika Gurung
Investing.com -- The oil-to-telecom conglomerate Reliance (NS: RELI ) Industries’ shares performed well, rising in the session on Monday after recording its worst single-day decline in 19 months on Friday.
Shares of the country’s most valuable company by market capitalization plummeted over 7% in the previous session, as the Government imposed special additional export taxes on petrol, ATF and diesel, along with a windfall tax charged on the gains of domestic refineries, given global crude oil prices jumping to eight-year peaks, in a surprise move on Friday.
The development will negatively impact domestic oil refining and marketing companies, as it is likely to dent refiners’ earnings.
However, global brokerage Morgan Stanley (NYSE: MS ) has exuded confidence in RIL, stating that the company is well-placed to deal with the government's surprise tax move on the export of petroleum products.
The company’s shares gained 1.4% post the brokerage’s call.
It believes that despite the tax implication, a mid-cycle margin is achievable for the heavyweight, and expects it to sustain a refinery margin of at least $15/barrel despite the tax.
Even a $15/barrel GRM will mean earnings upgrades for the company. MS has an ‘overweight’ rating on RIL, and a target price at Rs 3,253, an upside of 34.8% compared to Monday’s close.
Goldman Sachs (NYSE: GS ) and Jefferies have maintained their Buy calls despite the tax imposition, seeing up to 34% upside.
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