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ONGC shares under pressure after govt levies additional tax on crude oil production

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Shares of state owned Oil and Natural Gas Corporation (ONGC) has tumbled more than 17 per cent in the last two days trading sessions.
The shares came under pressure as a result of the government’s decision to levy $240 per tonne additional special additional excise duty on crude oil production in the country.
Brokerage firm JPMorgan India downgraded the stock in the wake of the new windfall tax.
The government on Friday surprised investors after imposing a $240 per tonne special additional excise duty on crude oil production in the country.
Brokerage firm JPMorgan downgraded its rating on the stock to ‘neutral’ from ‘buy’ earlier and cut its price target 26 percent to Rs 155 as it sees sharp cut in earnings estimate going ahead.
Brokerage Goldman Sachs cut its estimate for ONGC’s operating profit for 2022-23 and 2023-24 by 23 percent each resulting in its price target moderating to Rs 210 from Rs 285.
However, the brokerage retained its ‘buy’ rating on the stock as it believes that the company’s free cash flow will grow 21 percent in 2023-24 along with a dividend yield of 11 percent.
Share of ONGC was trading at Rs 125.60 down 4.16 per cent on Monday 11.17 am from its previous close.

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