- POSITIVE: Capital assistance of Rs300bn provided for the OMCs to take up energy transition projects; fund will most likely be utilised for funding RE, green H2 projects and will incentivise the companies to undertake / plan capex.
- NEUTRAL: 61% cut in total budgeted LPG subsidy to Rs22.57bn in FY24; this is a key negative, as international LPG prices have increased by almost 22% in past two months. The budget seems to assume massive correction in commodity prices; however, as seen in FY23 in case actual need > budget, Government may offer one-time grant to OMCs.
- NEGATIVE: No provision of subsidy / grant to OMCs is specified towards the losses incurred, while selling auto fuels. We estimate the OMCs collectively to incur loss of approx. Rs1trn in FY23 while selling auto fuels. While part of such loss is offset by supernormal GRMs, in 1H collectively OMCs have reported losses of Rs212bn (standalone), for which they would need financial assistance. The budget speech / provisions remain silent, and to that extent, it remains an overhang on the stocks.
Analysts of IIFL Securities believe mixed impact of the budget announcements on the oil & gas sector.