RIL share price tumbles 4%; govt's export duty on fuel spooks investors

RIL shares fell 4% after the govt imposed export duty on petrol and diesel. Here's why it impacts margins, stock outlook, and what analysts recommend.

Reliance Industries (RIL) share price was in focus on Friday, March 27, as investors pressed the ‘sell’ button on the counter.

RIL shares fell 4 per cent each on the BSE and the National Stock Exchange (NSE), hitting an intraday low of ₹1,356 per share and ₹1,357 per share on the respective exchanges. 

The shares were near their day’s low at noon as against a 1.64-per cent fall in the BSE Sensex index. RIL’s stock was the second top loser on the BSE Sensex index at the time of writing this report, behind IndiGo (down 4.3 per cent).

  RIL accounted for roughly 21 per cent of the Sensex’s 1,100-point decline today.

 

 

Why are RIL shares falling today?

Shares of Reliance Industries witnessed selling pressure on Friday after the Government decided to levy export duty on the sale of petrol and diesel in the international markets. 

Union Minister for Petroleum and Natural Gas, Hardeep Singh Puri, on Friday posted on social media platform ‘X’ that “any refinery exporting to foreign nations will have to pay export tax”.

  The move, analysts believe, has been done to ensure sufficient domestic fuel supplies at a time when importing fuel and gas has become constrained.

  The Strait of Hormuz, though open to India, remains choked with vessels moving at a snail’s pace due to Iran’s blockade of the supply route.

  Notably, Reliance Industries operates one of the world’s largest oil refineries at Jamnagar, Gujarat. A significant portion of its output -- petrol, diesel, aviation turbine fuel (ATF) -- is exported to global markets, where prices are higher than in India.

  Levy of export duties, thus, threatens RIL’s revenues. That apart, a levy of export duty on petrol and diesel, taxes every barrel exported, thereby reducing the net price (realisation) for RIL, hitting margins.

  Separately, RIL, on March 26, denied reports that it has bought Iranian oil.

  “The company categorically rejects recent media reports alleging the purchase of crude oil of Iranian origin. These claims are entirely baseless, factually incorrect, and misleading,” it said in a statement.

 

What should investors do with RIL shares?

Reliance Industries shares have not performed well on the bourses over the past few months. The stock is down 2 per cent in a month, and 13 per cent in 2026.

  However, RIL share price has outperformed the markets over the last one year as it gained nearly 7 per cent on the NSE. By comparison, the Nifty50 is down 2.7 per cent during the period.

  Analysts at Motilal Oswal Financial Services have a ‘Buy’ rating on RIL stock as they expect the elevated fuel prices, globally, to aid margins.

  “Following Russia’s invasion of Ukraine in February 2022, gasoil refining margins remained elevated during FY23/24. RIL’s consolidated O2C Ebitda rose 18 per cent year-on-year (Y-o-Y) in FY23 and remained stable in FY24 despite flat-to-slightly lower production meant for sale. Adjusted for the windfall tax paid on export of transportation fuel, its O2C Ebitda grew 30 per cent Y-o-Y in FY23,” MOFSL recalled.

  Thus, if gasoil/gasoline/jet fuel cracks sustain ~$15/5/15 per barrel above historical averages during H1FY27, the brokerage expects RIL’s O2C Ebitda to rise by ₹17,000 crore, implying nearly 8.5 per cent upside to their FY27 consolidated Ebitda estimate.

  That said, the brokerage expects some moderation in this upside amid the imposition of export duty.

  “The re-introduction of export duties on fuels (similar to the July, 2022 SAED) could cap refining margins and limit the upside to O2C earnings,” MOFSL had said in its March 16 report.

  The brokerage has a share price target of ₹1,750 per share.

  Those at JM Financial, too, have a ‘Buy’ rating on RIL shares with a share price target of ₹1,730.

  RIL, the brokerage said, benefits from rising global fuel prices as the diesel yield for RIL’s refinery is a high 40-50 per cent. Assuming diesel crack sustains at $30/bbl, RIL’s gross refining margin (GRM) could rise by $4-5/bbl.

  “Every $1/bbl rise in RIL’s GRM on an annualised basis results in an increase in its annual Ebitda by ₹4,500 crore or 2.2 per cent,” the brokerage had said in a March 4 note.

  It, too, cautioned that these abnormally high diesel crack face risk of the government imposing windfall tax or other duties.

  Post the Russia-Ukraine crisis, the government capped diesel/petrol crack at $20/bbl and took margin beyond that via windfall tax, it said.

  =================  Disclaimer: View and outlook shared belong to the respective brokerages/analysts and are not endorsed by Business Standard. Readers' discretion is advised.