Goldman, Citigroup cut India oil refiners on fuel price subsidy


Citigroup downgraded Bharat Petroleum Corp Ltd, Hindustan Petroleum Corp Ltd and Indian Oil Corp Ltd to sell, while Goldman Sachs lowered the first two companies to sell

Goldman, Citigroup cut India oil refiners on fuel price subsidy

Goldman Sachs Group Inc. and Citigroup Global Markets Inc. downgraded the stocks of India’s state-run fuel retailers after the government on Thursday asked them to subsidize retail fuel prices.

Citigroup downgraded Bharat Petroleum Corp Ltd., Hindustan Petroleum Corp Ltd. and Indian Oil Corp Ltd. to sell, while Goldman Sachs lowered the first two companies to sell, after the government cut the excise tax on gasoline and diesel by Rs 1.5 (2 cents) a litre and asked state-run oil marketing companies to absorb another Re 1 /litre on the sale of these fuels.

The announcement came just before the market closed on Thursday, driving refiners’ stocks down. The S&P BSE Energy Index tumbled 6.7%, the most since August 2015, while each of the three state-run refiners closed more than 10% lower.

The imposition of price controls is an “unequivocal negative” that underscores “high political risk” associated with state-owned enterprises, Citigroup’s analyst Saurabh Handa wrote in a note. Read More

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