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India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Technology/Software & Services Neutral
Largely as per expectations - Neutral impact on IT services
companies
STPI tax holidays not extended – Neutral to mildly negative: While some
sections of the industry lobbied for the extension of tax benefits for the Software
Technology Parks of India (STPI) units, we believe few actually expected it to come
through. The tax holiday is set to expire by the end of FY11, after being extended
twice before in previous years.
MAT increased; SEZ units to come under MAT – Neutral to mildly negative:
The Minimum Alternate Tax (MAT) was increased to 18% to 18.5%. In addition,
SEZ units coming under MAT was widely expected to come into force from FY13,
but has come in a year earlier. Both these factors could lead to a marginal increase
in cash outgo for companies, but there should be no EPS impact.
Increased defence spending - Positive: The planned defence capex for FY12 is
INR70b (USD15b), up from INR61b in FY11, or a 14% increase. We believe there
could be considerable increase in spending on modernising defence IT systems,
and see it as a positive development for the sector as a whole, and in particular,
Rolta India.
Increased thrust on government IT spending - Positive: The Budget speech
spoke of increased IT spending to improve governance. These include issuing 1m
Aadhar numbers (Unique Identification Numbers or UID) per day from October,
2011, and further spending on tax administration and other areas. We believe this
is a positive development given almost all companies under our coverage see
domestic IT business as a growth area.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Technology/Software & Services Neutral
Largely as per expectations - Neutral impact on IT services
companies
STPI tax holidays not extended – Neutral to mildly negative: While some
sections of the industry lobbied for the extension of tax benefits for the Software
Technology Parks of India (STPI) units, we believe few actually expected it to come
through. The tax holiday is set to expire by the end of FY11, after being extended
twice before in previous years.
MAT increased; SEZ units to come under MAT – Neutral to mildly negative:
The Minimum Alternate Tax (MAT) was increased to 18% to 18.5%. In addition,
SEZ units coming under MAT was widely expected to come into force from FY13,
but has come in a year earlier. Both these factors could lead to a marginal increase
in cash outgo for companies, but there should be no EPS impact.
Increased defence spending - Positive: The planned defence capex for FY12 is
INR70b (USD15b), up from INR61b in FY11, or a 14% increase. We believe there
could be considerable increase in spending on modernising defence IT systems,
and see it as a positive development for the sector as a whole, and in particular,
Rolta India.
Increased thrust on government IT spending - Positive: The Budget speech
spoke of increased IT spending to improve governance. These include issuing 1m
Aadhar numbers (Unique Identification Numbers or UID) per day from October,
2011, and further spending on tax administration and other areas. We believe this
is a positive development given almost all companies under our coverage see
domestic IT business as a growth area.
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