Shares of Mukesh Ambani's Reliance Industries Limited (RIL) witnessed a sharp decline during today’s (April 6) trading session in the Indian stock market. The stock fell by 4.13% to Rs 1,295 on the Bombay Stock Exchange (BSE), leading to a drop in the company’s market capitalisation from around Rs 18 lakh crore to Rs 17.65 lakh crore.
Geopolitical tensions in the Middle East are being cited as the primary reason behind the fall. The war intensified between the US, Israel and Iran has created uncertainty around crude oil supply after Tehran refused to open the Strait of Hormuz despite Trump's deadline, as Reliance operates one of the world’s largest refining hubs, and fluctuations in crude oil prices directly impact its profitability. The company’s shares have declined by over 8% in the past two weeks.
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Experts also point to the government’s decision to reimpose export duties on diesel and aviation turbine fuel (ATF) as a key factor. The export duty has been set at Rs 21.50 per litre on diesel and Rs 29.50 per litre on ATF. According to a report by Jefferies, this move could cap refining margins at around $20 per barrel for companies like Reliance. Concerns over shrinking margins have prompted investors to sell the stock.
On the taxation front, a PTI report quoted a senior official as saying that the reimposed windfall tax will not apply to Reliance’s Special Economic Zone (SEZ) refineries. A report by Citi Research noted that nearly 75% of Reliance’s diesel output and about 35% of its jet fuel production come from SEZ units. If these units remain outside the tax ambit, the company’s overall tax burden could be significantly reduced.