CLSA On Upstream Oil (ONGC, Oil India)

Government has announced an increase in the royalty rate on onshore crude oil production after the cut announced about a month ago. The new effective royalty rate of 13.33% on crude production from onshore fields is higher than the 10% announced on 8 May, but this is still lower than the 16.67% rate that was applicable before. Could hit EPS of ONGC/Oil India by 2%/9% See this as a one-off tweak to protect state government revenues see the recent stock price fall as an overreaction for ONGC Oil India expect it to report notable jump in production in its June quarter results

OIL INDIA LTD

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