Citi downgrades Essar Oil to 'neutral'

Citigroup has downgraded Indian refiner Essar Oil to 'neutral' from 'buy' and slashed its earnings per share forecast, saying there is heightened risk caused by a court ruling on tax liability.

"We cut our EPS sharply, from Rs 11.78 to Rs 1.03 for FY13, to account for ceasing of sales tax benefit and lower gross refining margin assumptions," the US bank said in a note. It also cut its target price to Rs 69 from Rs 120. At 10:13 a.m., Essar shares were down 0.3% at Rs 68.15.