JS Securities Limited – Government has potentially raised deemed duty on HSD for refineries

Karachi, May 04, 2015 (PPI-OT): As per media reports, ECC has raised regulatory duty on High Speed Diesel (HSD) for refineries from 7.5% to 10% effective from Jun 1, 2015. JS Securities Limited understands, as per JS Securities Limited’s discussions with some industry sources, this is the deemed duty the government has raised.

The move which comes as a surprise is likely to lead to earnings accretion for Pak Refineries. However, ambiguity over the matters remains over the application of the same as 2% regulatory duty has also been imposed on import of crude oil and petroleum products.

JS Securities Limited estimates if the deemed duty has been raised, Attock Refinery (ATRL) and National Refinery (NRL) can witness potential annual earnings upside of ~Rs8.5/share and ~Rs12.0/share respectively.

JS Securities Limited believes along with presently prevailing high GRMs, increase in deemed duty is likely to lift near-term earnings outlook for refineries.

JS Securities Limited turns ‘Over-Weight’ on refineries, with ATRL JS Securities Limited’s top pick in the sector.

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