Indian Equity Research and Investment Strategy
You can now check the status of your application for MindTree Consulting IPO here. Due to heavy over subscription in the retail category, all the applicants fate has been decided by lottery. The ratio of allotment is 1:2 in Rs 1.0 Lakh application.
The IPO status of Idea Cellular will be made available here by tomorrow evening. Just choose Idea Cellular from the drop down menu.
Looks like the FM had directions from Italian Lady to slowdown the growth and focus on “Common Man“, especially with UP elections around the corner. FM rightly said, Budget is presented in a context of Economic and Political conditions. Here are some thoughts,
Sector Cement: [Negative]
These guys have had an extended honeymoon and thus its good that they are punished hard.Increasing excise duty from Rs400 to Rs600 for price above Rs190 per bag and reducing from Rs400 to Rs350 is a negative as cement price per bag in most of the places is above Rs190 at present. With demand strong we believe the increase in the duty would be largely passed on, but continuous efforts by the Government to curb the price increase and reduce the profitability of the industry is visible.
Sector Oil & Gas: [Positive]
Reduction in ad valorem excise duties for petrol and diesel – positive for Oil Marketing Companies IOC, BPCL and HPCL. Reduction in custom duties on Plastics, polyester and intermediates – positive for Reliance Industries, GAIL, IOC and IPCL
Infrastructure status to cross-country pipeline projects – positive for Reliance Industries, GAIL, GSPL, Gujarat Gas and Indraprastha Gas Ltd.
Extension of service tax to mining of oil and gas – marginally negative for ONGC, Reliance, and Cairn India
Healthcare: [Positive]
Healthcare allocation increased. Allocation for immunization program is Positive for Panacea Biotech. HIV eradication to gain momentum – Positive for MNC, Cipla, Wockhardt. 150% weighted average tax deduction for R&D expenses extended for 5 years is Positive for research driven pharma companies-Ranbaxy, DR Reddys Labs, Sun Pharma, Cadila Healthcare, Biocon and Glenmark. Clinical trials out of service tax net. Medical insurance deduction u/s 80DD increased to Rs15,000 is positive for Apollo Group, Max India as more population would be covered by medical insurance.
Information Technology: [Negative] End of Honeymoon
The pampered kid of the Indian industry is all set to face some uphill tasks. Minimum Alternate Tax to be applied to IT companies to 11.2% on book profits. Inclusion of ESOPs under the FBT net negative for the sector. Non-extension of STP benefits beyond 2009 negative especially for medium & smaller sized IT companies. SEZ operations will be spared.
Construction: [Negative]
The budget proposed withdrawing the ten-year income tax breaks on infrastructure construction contracts available under section 80 IA, with retrospective effect from April 2000. WTF ? Am I Kidding ? No way. Before you do business in India be prepared to pay Taxes in retrospective LOL. What a D**k Head 🙂
The withdrawal of the benefit will raise the tax liability of construction firms which in turn will impact their profit margins, analysts say. Further, their short-term cash-flow may also be affected due to tax payment for previous years as the tax benefit has been withdrawn from April 2000. One of my favorite stock Punj Lloyd is also in the constructions business but more than half of its contracts are outside India just like L&T.
Real Estate:
Commercial Real Estate rentals bought under Service Tax net. Tax exemptions for Hotels and Convention centers in Delhi and NCR regions. But who knows after the commonwealth games, some other D**k Head Finance Minister may impose tax collections in retrospective. LOL
Their were no significant announcements for Banking, Telecom and Power Sectors in this budget.