When the government announced a gas price increase recently, state-owned Oil and Natural Gas Corp (ONGC) and Oil India were considered to be bigger beneficiaries than their private sector peer, Reliance Industries (RIL).

Now, as the initial euphoria settles, the scale is tilting towards RIL, which investors think would be the bigger beneficiary than the public sector companies. At least, the stock price movements reflect this perception.

Shares of ONGC and OIL have declined by six and seven per cent, respectively, after the announcement on June 28. RIL has gained five per cent. However, RIL on Wednesday closed down by two per cent on the back of reports that the company will only be allowed to increase the price for future discoveries.

Analysts said investors feared the increase might not benefit the state-owned companies. “There will be no incremental gain. Whatever extra the companies will earn through the increase in fuel prices will be taken away by the government in the form of a higher subsidy burden,” said S P Tulsian, a Mumbai-based independent analyst.

And, on the other hand, “Reliance Industries, being a private player, remains immune from the subsidy burden. Also, the rupee depreciation has done good for the company, as its sales are quoted in dollars,” said Rikesh Parikh, vice-president of equities at Motilal Oswal Financial Services. The rupee has declined by a little over 10 per cent since April.

Last month, the government had announced a doubling of gas prices to $8.4/mBtu, effective April 2014. Fertiliser and power companies account for 60-70 per cent of the end-users of gas.

Analysts are still awaiting clarity on the percentage of subsidy burden to be passed on. “There is no clarity regarding the subsidy sharing arrangement. At present, about 40 per cent of the burden lies with oilmarketing companies. This is expected to go up t0 55-60 per cent,” said Parikh.

However, not all analysts are worried on this count. The fuel price increase of $8.4/mBtu was higher than Street’s expectation of $6.77/mBtu.

“We expect an increase of Rs 3 and Rs 4.5 in the earnings per share of ONGC and Oil India, respectively, for every $1/mBtu increase in gas price,” said a report on the oil and gas sector by Karvy Stock Broking, authored by Vinay Nair.

On Wednesday, the stock of ONGC was down 1.8 per cent and closed at Rs 296 a share. Oil India was down 0.1 per cent to Rs 534. RIL, which fell as much as 3.5 per cent during the day, closed at Rs 856.35, down 1.9 per cent from its previous close.