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Infrastructure
The sector has underperformed over the last twelve months relative to the BSE Sensex on the back of issues on the
execution front – delays in financial closure, environment clearance issue, slowdown in order inflow and land
acquisition related problems – and consequent slow down on the earnings front. Moreover, the inflationary
pressures, spiraling commodity prices and rising interest rates are also hurting overall profitability of the
companies.
Nonetheless, given that the sector plays a vital role in achieving the desired run rate of economic growth, we
expect some announcements to come through, viz. higher allocation to flagship programs of Bharat Nirman,
JNNURM, APDRP, AIBP and NHDP. Land acquisition and environment clearance are the two major bottle-necks
hampering timely execution of projects. Hence, roll out of policies to expedite these procedures would lend a fillip
to the sector.
Further, we expect the government to look at more avenues of long-term financing for the sector including creation
of corporate debt market, dedicated infrastructure debt fund and attracting foreign investment, which would solve
the current asset-liability mismatch problem faced by the banks. However, creation of these funds would require
regulatory changes.
Overall, we expect the Budget to be Positive for the Infrastructure Sector.
Budget Expectations
Head Current Status Wish List Potential Impact
It will be positive for all players in the sector as it
Dedicated infrastructure
debt funds N.A. Should become operational
provides long-term funding for projects and will remove
the major concern of asset-liability mismatch faced by
the banks in the current scenario
Deduction of additional
Tax benefit on investment
s made in infrastructure
bonds
`20,000 is allowed over
and above the `1 lakh limit
prescribed for investment in
tax saving schemes
Extending this window and
enhance this limit to `50,000
This move will help in meeting the long-term needs of
infrastructure development in India, as money raised
through these bonds will be invested in infrastructure
projects
MAT rate 18% Reduction in MAT rate Positive for all developers
Increased allocation to
the Sector
Current Infra spend of 6%
of GDP is much below the
requirement
Taking Infra spend to
9-10% of GDP
It will help India to achieve 9%-plus economic growth,
as currently physical infrastructure has emerged as the
biggest constraint in achieving the desired economic
growth
Top Picks
L&T
IVRCL
NCC
ITNL
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Infrastructure
The sector has underperformed over the last twelve months relative to the BSE Sensex on the back of issues on the
execution front – delays in financial closure, environment clearance issue, slowdown in order inflow and land
acquisition related problems – and consequent slow down on the earnings front. Moreover, the inflationary
pressures, spiraling commodity prices and rising interest rates are also hurting overall profitability of the
companies.
Nonetheless, given that the sector plays a vital role in achieving the desired run rate of economic growth, we
expect some announcements to come through, viz. higher allocation to flagship programs of Bharat Nirman,
JNNURM, APDRP, AIBP and NHDP. Land acquisition and environment clearance are the two major bottle-necks
hampering timely execution of projects. Hence, roll out of policies to expedite these procedures would lend a fillip
to the sector.
Further, we expect the government to look at more avenues of long-term financing for the sector including creation
of corporate debt market, dedicated infrastructure debt fund and attracting foreign investment, which would solve
the current asset-liability mismatch problem faced by the banks. However, creation of these funds would require
regulatory changes.
Overall, we expect the Budget to be Positive for the Infrastructure Sector.
Budget Expectations
Head Current Status Wish List Potential Impact
It will be positive for all players in the sector as it
Dedicated infrastructure
debt funds N.A. Should become operational
provides long-term funding for projects and will remove
the major concern of asset-liability mismatch faced by
the banks in the current scenario
Deduction of additional
Tax benefit on investment
s made in infrastructure
bonds
`20,000 is allowed over
and above the `1 lakh limit
prescribed for investment in
tax saving schemes
Extending this window and
enhance this limit to `50,000
This move will help in meeting the long-term needs of
infrastructure development in India, as money raised
through these bonds will be invested in infrastructure
projects
MAT rate 18% Reduction in MAT rate Positive for all developers
Increased allocation to
the Sector
Current Infra spend of 6%
of GDP is much below the
requirement
Taking Infra spend to
9-10% of GDP
It will help India to achieve 9%-plus economic growth,
as currently physical infrastructure has emerged as the
biggest constraint in achieving the desired economic
growth
Top Picks
L&T
IVRCL
NCC
ITNL
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