UnionBudget2015-16

128 Feb 2015

BUDGET 2015-16

In the right direction

2Investment summary

Fiscal credibility maintained in medium term (FRBM relaxation by a year) despite large award to states. Interest rate trajectory intact (another ~75 bps rate cuts in FY16): Hence Banking, Auto, Realty to benefit. Rule-based monetary policy framework okayed, which also ties government down to fiscal consolidation. Slippage to 3.9% used for infra vs. subsidies

Ease of doing business: Tax procedures, GAAR postponed, Corporate tax rate cut 30% to 25% over 4 years from FY17 (but certain exemptions to be removed and surcharge increased from 10% to 12% from FY16 for most large companies)

Financial savings: Pension scheme, gold bonds, penal measures for undisclosed monies

Infrastructure:

Biggest beneficiary - Roads: ~Doubled allocation Rs 850 bn, though some of it necessitated by reduced BoT/ PPP models

PSU and Rail capex also substantially increased, 5 UMPPs planned, Corporatization of public ports with land monetization

Financials: SARFESI Act extension to NBFCs. Fungibility of foreign limits for banks who have near-breached FII limits (Axis Yes!

Other beneficiaries: Clarity on REITs, Reforms in Commodity exchanges by SEBI, Customs duty increase on CVs (to pre-empt Chinese dumping), Pharma companies building capacities in AP/ Telangana

Losers: Cigarette excise increased despite fall in volumes, Path for PSU bank capitalization not specified

Top Picks > $2 bn mkt cap: HDFC Bank, L&T, Eicher Motors, Rural Electrification, IDFC, LIC Hsg, ABNuvo, Ashok Leyland

Top Picks < $2 bn mkt cap: Prestige Estates, Oberoi Realty, Arvind, Tube Invst, Cox & Kings, Redington, Ahluwalia Contracts

UNION BUDGET FY16

28 FEB 2015 Strategy Report

Overall allocation for transport up 1.7x at Rs 1,934 bn

Fund (NIIF) planned with Rs 200 bn corpus and 10x leveragability

Plug & play approach to be extended from Power to other sectors

PPP to be revisited with higher sovereign risk

Tax free bonds

Investment trusts to monetize operating assets

3Top post budget picks

CompanyCMP(Rs)

Target Price(Rs) Rationale

HDFC Bank 1,068 1,364 Operating leverage to kick in; RoAs to be over 2% by FY17

L & T 1,767 1,803 Biggest beneficiary of 1.7x increase in transportation capex

Eicher Motors 16,227 20,036 Structural growth in 2W business, cyclical recovery in CVs

Rural Electrification 331 430 High RoE amongst PSU entities with visibility on ~20% CAGR growth, benefit from infra reforms

IDFC 173 213 Conversion to Bank is structurally positive; FII room, high capitalisation

LIC Housing 479 550 20% CAGR growth, no asset quality challenges, possibility of margin improvement

Aditya Birla Nuvo 1,719 2,587 Value unlocking triggers - Insurance, Fashion & Lifestyle. 25% CAGR in NBFC business

Ashok Leyland 70 92 FCF cycle at a sweet spot

Prestige Estates 286 323 Sales run-rate to double in 3-4 years; value unlocking potential through REITs

Oberoi Realty 322 348 Volume revival through new launches; value unlocking potential through REITs

Arvind 307 410 Play on scale up of Brands & Retail business

Tube Invst 352 487 Value unlocking of general insurance business; operating leverage in standalone business

Cox & Kings 320 428 Key beneficiary of uptick in domestic tourism; de-leveraging to drive growth

Redington 123 196 Play on Digital India and GST implementation. ~16% CAGR in earnings and 23% RoE

Ahluwalia Contracts 238 305 30% ROCE at 12x FY17 PE, key beneficiary of realty build up

UNION BUDGET FY16


4Sectoral impact: Summary

Sector Key budget measures Impact

UNION BUDGET FY16


Autos

Excise duty was increased pre-budget itself. Few indirect positives: Increased allocation (>2x) towards road construction Custom duty on imported CVs (CBUs) increased to 40% from 10% Higher MNREGA allocation and long-term measures to improve

farmer productivity/income Capex for defense increased by 15% YoY (MHCVs by 10% YoY) Measures to enhance individual tax exemptions

Positive: Ashok Leyland, Bharat Forge, 2Ws, tractors

Banking & Financial Services

Fungibility of FDI and FII limits

SARFAESI Act benefit extended to NBFCs

Agriculture loans target at Rs 8.5 trn vs. Rs 8 trn in FY15

Limited capital allocation of PSU banks

Establishing Bank Board Bureau for PSU banks. Path towards creation of Holding Company structure

Positive for Private banks and NBFCs

Cement Increased spending on infrastructure/housing and plans to revitalize PPP mode of infrastructure

Positive: Industry would benefit from higher volume growth



UNION BUDGET FY16


Capital goods

Outlays up by 50% : Bulk of the increase in roads (up 195%) and railways (up 53%)

Push on metro rail projects and smart cities: 7 new metro projects to be awarded in FY16

5 new UMPPs announced to be awarded with all clearances Eased infra financing through formation of a National Infrastructure

Fund and Infra investment trusts. NIF has a potential of infra lending of USD 30 bn through initial equity commitment of USD 3 bn

Resolution of contractual disputes: Setting up a regulator for resolution of contractual disputes for public sector projects

Positive: L&T, BHEL, Thermax and EPC companies

Commodity Exchanges

Forward Markets Commission to be merged with SEBI. This will pave the way for higher liquidity and market depth through introduction of new products (options/indices) and institutional participation in commodity exchanges in the long term

Commodity derivatives included in Securities Contract Regulation Act

Positive: MCX



UNION BUDGET FY16


FMCG & Retail

Excise duty on cigarettes hiked by weighted average ~18% We expect ITCs cigarette volume to decline by ~8% in FY16 as we expect 17% price hike. Earnings downgraded by ~3%

Reduction in excise duty on footwear was partly offset by lower abatement charges

Increased allocation to MNREGA (up ~20% YoY) and GST roll out from April16 is a positive

Negative: ITC & cigarettes playersPositive: Asian Paints, Berger Paints and Bata

Infrastructure Allocation for transport up 1.7x led by roads and railways PPP to be revisited and revitalized PSU ports to be gradually corporatized

Positive for EPC companies, and road developers like ITNL, IRB and AshokaBuildcon

Metals/ Mining Increase in clean energy cess on coal to Rs 200/ton (Rs 100/ton currently)

Neutral for Coal India, as it will be passed on to consumers

Media Service tax to be levied on amusement facility, entertainment events or

concerts, pageants, non-recognized sporting events etc.

Negative:Wonderla HolidaysNo impact PVR and INOX Leisure as it is not applicable for Exhibitors



UNION BUDGET FY16


Oil & Gas

Lowering fuel subsidy provision to Rs 300 bn in FY16 (Rs 603 bn in FY15), which reflects overall reduction in gross under-recoveries

Tweaking excise duties on petrol/ diesel (reducing basic duty and hiking additional duty by same amount) keeping overall duty same

Cut customs duty on EDC/VCM/ Styrene to 2% from 2.5%. For naphtha (used for excisable goods), customs duty cut to 2% from 4%

Continued expansion of Direct Benefit Transfer for LPG

Neutral: for Oil PSUs as Rs 300 bn implies government subsidy share at ~75% Neutral: for OMCs as total excise duty unchangedNeutral: for refining/ petchem as domestic prices are 10-15% premium to IPP

Pharmaceuticals

(1) Additional investment allowance at 15% and (2) additional depreciation at 15% to new manufacturing units set up from 1st Apr 2015 to 31st Mar 2020 in notified areas of Andhra Pradesh (AP) and Telangana

Companies having capex plans largely in AP and Telangana like Aurobindo (capex of Rs 7 bn in FY15F), Divis (Rs 6 bn) and Dr Reddys (Rs 10 bn) would gain given higher allowance and lower depreciation

Positive Aurobindo, Divis, Dr. Reddys



UNION BUDGET FY16


Realty

Provided exemption on long-term capital gains for sponsors and tax pass through status to rental income at REIT level

Allocation for rural and urban housing increased in continuation to the Govts Housing for all initiative (60 mn units to be built by 2022)

To improve liquidity for the sectorPositive for developers with strong annuity portfolio like DLF, Prestige, Phoenix and Oberoi

Telecom

Increase in service tax (ST) to14% from 12.36%. ST is a pass through and has no material impact on minutes (except for full talk time plans where operators absorb the same)

Phased reduction of corporate tax to 25%

Budget receipts pegged at ~Rs 429 bn in FY16 (Rs 432 bn in FY15E). Budgetary receipts in line. ~Rs 230 bn will be from annual regulatory levies and balance from additional 15 MHz of 2100 spectrum band

Neutral: Bharti Airtel, Idea

Power Clean Energy Cess on coal increased to Rs 200/ton from Rs 100/ton

Negative for IPPs selling power on merchant basis such as Adani Power, JSW Energy, etc.

Neutral for NTPC

9Contents

Page

Macro 10

Sectoral impact 14

UNION BUDGET FY16


10

Macro

11

Tax measures: A mix of near term to longer term measures

GST rollout from Apr 1, 2016 reiterated

Excise duty Central Excise duty increased to 12.5% from existing 12.36%FMCG: Excise duty increased by a blended ~18% on cigarettes

Service Tax

Rate increased to 14% from 12.36% Negative Service tax list pruned. Services of pre-conditioning, pre-cooling, ripening etc. of fruits and

vegetables, Life insurance service provided by way of Varishtha Pension Bima Yojana, All ambulanceservices provided to patient

Direct/ Other taxes

Limit of deduction of health insurance premium increased from Rs15,000 to 25,000, for senior citizens limitincreased from Rs 20,000 to Rs 30,000

Limit on deduction on account of contribution to a pension fund and the new pension scheme increased fromRs 1 lakh to 1.5 lakh

Additional deduction of Rs 50,000 for contribution to the new pension scheme u/s 80CCD

Customs duty

Peak Customs duty unchanged, selective tweaks Metallergical coke from 2.5% to 5% Tariff rate on iron and steel and articles of iron and steel increased from 10% to 15% Tariff rate on commercial vehicle increased from 10% to 40%

UNION BUDGET FY16


Corporate TaxRate to be lowered to 25% from 30% over the next 4 years However, this will be accompanied by a phased reduction exemptions

12

Broader numbers seem realistic with some buffer built in on excise

Nominal GDP growth at ~11.5% assumption either presumes high real GDP growth rate or lower than expected inflation rate. Expenditure switching from consumption to Infra is a much needed qualitative change. However,

govt spending increase of just 6% YoY may require steady hands with just 1% net tax revenue growth

UNION BUDGET FY16


(R s b n)FY15

BEFY15

RE

Variance15RE/

15BE (%)

Chg YoY 15RE/

14RE (%)FY16

BE

Chg YoY FY16BE/

FY15 RE (%) CommentsGross Tax Revenue 13,645 12,514 (8) 10 14,495 16 Tax revenues realis tic led b y excise &

serv ice taxCorporation tax 4,510 4,261 (6) 8 4,706 10Income tax 2,843 2,786 (2) 15 3,274 18Excise duty 2,071 1,855 (10) 9 2,298 24 Lower than anticipated excise from petrol/ diesel

implies a sizable buffer Customs duty 2,018 1,887 (6) 10 2,083 10Service tax 2,160 1,681 (22) 9 2,098 25 Increase in tax rate, but negative list pruned a bitDevolvement to S tates & Union Terri tories

3,873 3,429 (11) 6 5,296 54

Net tax revenues 9,773 9,085 (7) 11 9,198 1 Net rev flat sesp ite 16% gross revenue Non tax revenues (incl dividend, interest, etc) 2,125 2,178 3 10 2,217 2Non-debt capital receipts (incl divestment) 740 422 (43) 1 803 90 Divestment fig of Rs 690 bn incl HZL & Balco &

SUUTINon p lan revenue exp enditure 11,146 11,219 1 10 12,060 7Interest 4,270 4,114 (4) 10 4,561 11 Benefits of softer int rate regimeDefense 1,344 1,404 4 13 1,521 8Sub s idies 2,607 2,667 2 5 2,438 (9) Food & fert il iser sub sidies largely flat

(overdue arrears ), count ing on b enefit s from crude

Non plan capital expenditure 1,053 913 (13) 5 1,062 16 Largely defencePlan Exp enditure 5,750 4 ,679 (19) 3 4 ,653 (1)Total Exp enditure 17,949 16,812 (6) 8 17,775 6 Exp enditure growth target s ti ff wrt

his torical rates Fiscal deficit (5,312) (5,126) (5,556)Fiscal % of GDP (4 .1) (4 .1) (3.9)

13

Yields to remain range bound in the short term

Fiscal deficit targets revised from 3.6%/ 3% of GDP in FY16/ 17 to 3.9%/ 3.5%/ 3% in FY16/ 17/ 18 respectively

Despite slightly higher than expected fiscal & revenue deficit target , net borrowing of Rs 4.5 trn is lower

We expect a manageable demandsupply mismatch ~ Rs 250 bn in FY16

Note: Deposit & Credit growth assumed at 14% for FY16

UNION BUDGET FY16


System liquidity : Demand-supply dynamics to be comfortable Net borrowings contained at just 82% of fiscal deficit

Particulars FY15 RE FY16 BEDemand for fundsNet Govt borrowings 4,469 4,564State govt borrowings 1,600 1,800Total govt requirement 6,210 6,364Source of fundsBank SLR 2,404 3,021Insurance 1,800 1,944MFs, PFs & FIIs 1,000 1,150Availability for govt 5,460 6,115Net difference (750) (249)Key assump tionsNet govt borr as % fiscal deficit (87) (82)

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Net market borrowings Borr/ Deficit (RHS)

14

Sectoral impact

15

Auto

Increased allocation (>2x) towards road construction activity to Rs 950 bn

Positive for CV demand, esp. tippers; Ashok Leyland is a dominant player

Custom duty on completely built imported CVs increased to 40%. CKD (completely knocked down) duty remains unchanged at 10%

Positive for CV OEMs. While imported CVs form a negligible portion of industry, it allays recent fears of Chinese dumping

Budget was somewhat a non-event (expected) as excise duty was increased pre-budget itself

UNION BUDGET FY16


Overall defense capex increased 15% YoY to Rs 950 bn. For MHCV procurement, outlay increased 10% YoY to Rs 21.3 bn

Positive for players with defense exposure: Ashok Leyland, Bharat Forge

Allocation to MNREGA increased to Rs 400 bnand long-term measures to improve farmer productivity/income

Positive for 2Ws (as it supports rural wages) and tractors (as it aids farm mechanization)

Current status ImpactBudget proposal

Current year allocation at Rs 420 bn

Current year allocation at Rs 820bn (MHCV at Rs 18.6 bn)

Current year MNREGA allocation at Rs 325 bn

Measures to increase income tax exemption for individuals (cumulatively by Rs ~75k p.a.)

Positive for 2Ws and small cars

Current custom duty on imported CVs at 10%

16

Banks and NBFCs

Current status Impact

FII limit was restricted at 49% and overall foreign limit at 74% for private banks

Positive: Possibility of higher FII participation and inclusion in global indices

Key beneficiaries: Axis Bank, Yes Bank

Fungibility of FDI and FII limits is positive for private banks

Budget proposal

Fungibility of FDI and FII limits. Overall foreign limit at 74% for private banks and 20% forPSU banks

UNION BUDGET FY16


Positive: Key beneficiary - LT Finance, Bajaj Finance, Shriram Transport, Cholamandalam Finance, Mahindra Finance

SARFAESI Act benefit extended to NBFCs Currently applicable only for banks and HFCs

Negative for PSU banks as significant capital requirement (~Rs 2.4 trn needed by FY18)

Rs 69 bn provided in FY15YTD (allocation was Rs 112 bn in FY15)

Capital allocation for PSU banks at Rs 79 bn

New initiative Neutral: This will help in appointment of top management and capitalization of PSU banks . We believe this will take time and execution of the process needs to be watched out for

Establishing Bank Board Bureau. Path towards creation of Holding Company structure for PSU banks

17

Banks and NBFCs

Budget proposal Current status Impact

Neutral: Marginal positive impact for SOTP plays Max India, Reliance Capital, Bajaj Finserv, Religare Enterprises

Higher exemption on health insurance premium Tax exemption limit increased to Rs 25,000 from Rs 15,000 for individuals and to Rs 30,000 from Rs 25,000 for senior citizens

Positive: 5% reduction in tax rate for full tax paying private banks will their improve RoA by ~10 bps ; ~5 bps for PSU banks

Reduction in Corporate Tax rate to 25% from 30% over 4 years

Most BFSI companies are full tax paying with limited exemption

UNION BUDGET FY16


Agri loans target at Rs 8.5 trn Previous budget target was Rs 8 trn. Current agri loan book at Rs 7.5 trn

Neutral: No significant increase in agriculture credit target

18

Capital Goods, EPC and Power


FY15 at Rs 98 bn Positive for L&T, J Kumar, BEML, Siemens, Simplex etc.

Metro rail to award 7 new projects. Increased outlay for FY16 by 18% to Rs 116 bn

Increased outlay for roads and railways POSITIVE for L&T and EPC companies

No regulator earlier Positive for Capital Goods and EPC companies

Regulator for resolution of contractual disputes for public sector projects

No such financing mechanism earlier

Positive for Capital Goods and EPC cos National Infrastructure Fund (NIF) of USD 3 bnwith potential infra lending of USD 30 bn

UNION BUDGET FY16


Earlier plan of 2 UMPPs Positive for BHEL, L&T, Thermax 5 new UMPPs of 20 GW to be awarded with all clearances - plug and play model . Timeline not specified

No such financing mechanism earlier

Positive for L&T, Sadbhav and other asset owners

Infrastructure investment trusts will enable private developers to free up capital to take new projects

FY15 at Rs 281bn Positive for EPC companies Increased outlay on road for FY16 by 194% toRs 827 bn on higher proportion of EPC orders

FY15 at Rs 643 bn Positive for L&T, Simplex, Siemens, etc. Increased expenditure on railways for FY16 by 53% to Rs 984 bn

19

Capital Goods, EPC and Power UNION BUDGET FY16

Strategy Report

Positive for power gencos as higher capex helps reduce T&D losses

~ Rs 39 bn spent on such schemes in FY15

Power T&D expenditure at Rs 49 bn


Cess charged at Rs 100/ton

Negative for IPPs selling power on merchant basis such as Adani Power, JSW Energy, etc.

Neutral for NTPC

Clean Energy Cess on coal increased to Rs 200/ton

28 FEB 2015

20

Capital Goods, EPC and Power

Source: Budget documents

UNION BUDGET FY16


Capex for key schemes

(Rs bn) FY14 FY15 FY16 FY15/FY14 FY16/FY15Defense 791 820 946 4 15Railways 529 643 984 22 53Metro (Under MoUD) 82 98 116 19 18Roads (MORTH) 287 281 827 (2) 194Rural Roads (PMGSY) 90 144 143 59 (1)Urban Infra (JNNURM) 107 158 211 48 34Renewable Energy 11 18 24 57 34IPDS (earlier APDRP) 6 7 6 6 (14)DDUGJY (earlier RGGVY) 29 32 43 10 33Total 1,934 2,201 3 ,299 Growth (%) 13.8 49.9

Growth YoY (% )

21

Commodities


CementIncreased spending on Infrastructure and housing Outlay for road transport increased 3x to

Rs 830 bn in FY16 60 mn new houses by 2022 in rural and

urban areas Plans to revisit and revitalize PPP mode of

infrastructure

_ Positive: Industry would benefit from higher volume growth

MetalsClean energy cess on coal Increase to Rs 200/ton

Rs 100/ton Neutral for Coal India, as it will be passed on to consumers

UNION BUDGET FY16


22

FMCG & Retail


Excise duty on cigarettes 18% weighted average increase for cigarettes

portfolio of ITC. Excise duty has been hiked by 25% for 64 mm cigarettes, which is a price sensitive segment. Excise hike in other segments has been increased by 15%

Multi-slab excise structure. Previous three years have seen18%-+ p.a. increase in excise duty

Negative for ITC and other cigarettes players. Cigarettes volume expected to decline by ~8% (vs. earlier est. of flat growth) in FY16 on17% price hike. Earnings downgraded by ~3%. Expect stock to derate

Fourth consecutive year of over 18% excise hike on cigarettes;GST implementation from April16 a positive

GST to be rolled out from April 16GST has been deferred in the past due to lack of political consensus. Introduction of GST will benefit branded FMCG players by (a) creation of level playing field , (b) reducing cascading impact of taxes, (c) widening of tax compliance and (d) improved efficiency in supply chain

_ Positive for branded FMCG players, especially Paints (Asian Paints, Berger Paints). Clarity on GST rate and inclusion of excise exempt categories such as edible oil will be key to determine benefit for other players. However, benefit to flow from FY17

Increased allocation for MNRGEA by 15-20% Highest ever allocation at Rs 400 bn

MNREGA allocation at Rs 350 bn last year

Positive for FMCG companies especially rural focus players such as HUL, Dabur, Colgate etc. Higher allocation will support rural wages and boost rural consumption

UNION BUDGET FY16


23

FMCG & Retail


Service Tax increase to 14% Currently at 12.36% Neutral for Retail players like Shoppers Stop, Titan, Westlife Development, as we expect the companies to pass on the increase in tax to consumers

Introduction of Gold Monetization scheme to replace present schemes such as Gold Deposit and Gold metal Loan Schemes

_ Positive development for jewellerycompanies like Titan. The scheme will make available domestic gold to jewelers by taping into Indias stock of unused gold (20,000 tonnes), reduce gold imports and cost associated with it. The scheme will also reduce smuggled gold and enable a level playing field for organized and unorganized players

Reduction in excise duty for leather footwear: Over Rs 1,000 per pair reduced from 12% to 6% Abatement for footwear reduced from 35%

to 25%

Footwear < Rs 500/pair at 0% > Rs 500 but

< Rs 1,000/pair at 6% > Rs 1,000/pair at 12%

Positive for Bata. However, excise duty reduction will be partly offset by lower abatement charges. Increase earnings by 2% to factor the same

UNION BUDGET FY16


24

Infrastructure (overall allocation for transport up 1.7x at Rs 1,934 bn)


Allocation of Rs 850 bn to Roads ministry (up by Rs 470 bn vs. FY15BE). Bulk of increase from Internal and Extra Budgetary resources (up by Rs 337 bn vs. FY15BE)

Positive for road developers and EPC players. Announcement along expected lines as going forward 80% projects to be funded by govt (50%+ by PPP earlier)

Only ~2,000 kmsawarded vs. 5-year average of 3,500 kms

PSU ports to be gradually corporatized, thereby attract investments and leverage available land

Positive for EPC players, PSU ports in medium term

Negative for private ports in long term

PSU ports capex has lagged plans, benefitting private ports

Positive for Asset owners like GMR, Adani Ports, ITNL, IRB, Gujarat Pipavavas it may ease availability of funds

Clarity on DDT at SPV level awaited for InvITs

Infra debt funds and tax free bonds to incentivize investment in infra

Issues of double taxation resulting in lower yields

Establish National Investment and Infra Fund (NIIF), and infuse Rs 200 bn pa. It will enable Trust to raise debt, and invest in infra finance cos

Tax free infra bonds for rail, road & irrigation InvITs Exemption of long term capital gains for

sponsors

Positive for Road owners like ITNL, IRB if NHAI provides more grant

PPP to be revisited and revitalized sovereign will have to bear a major part of risk

PPP financed/executed primarily by pvt. players

UNION BUDGET FY16


Positive for entire space as it would ensure more predictable timelines

EPC companies/ developers have to secure all clearances

Government would consider plug-and-play projects in roads, ports, rail lines, airports etc.

25

Oil & Gas

Current status Impact

Customs duties Naphtha: 4% EDC/VCM/ Styrene:

2.5% HDPE: 7.5%

Neutral: for refining/ petchem Refiners: Reduction in naphtha duty will

have negligible impact on GRMs Petchem players: Domestic prices are at

10-15% premium to IPP. Hence, realizations unlikely to get impacted

Neutral: for Oil PSUs as Rs 300 bnincludes Rs 120 bn for Q4FY15, leading to Rs 180 bn for FY16, which represents ~75% of FY16 gross u/r at Rs 240 bn

Neutral for budget as no wide changes in duty structure are announced

Neutral: for OMCs as total excise duty unchanged

Overall excise duty on petrol and diesel at Rs 17.5 and Rs 10.3/ ltrrespectively (unchanged)

Budget proposal

Customs duty on naphtha (for use in manufacture of excisable goods)/ EDC/VCM/ Styrene cut to 2%. HDPE for use in manufacture of telecom fibrecables to Nil

Fuel subsidy provision at Rs 300 bn in FY16

Tweaking excise duties on petrol/ diesel keeping overall duty unchanged (reducing CENVAT byRs 3.5/3.7/ltr, reducing educational cess to zero, and hiking additional duty proportionately)

Continued expansion of Direct Benefit Transfer for LPG (DBTL)

Of total 150 mn LPG users, 100 mn have already joined DBTL

Marginally positive for oil PSUs as LPG subsidy will reduce

UNION BUDGET FY16


Subsidy provision was Rs 603 bn in FY15. The decline reflects reduction in gross under-recoveries

26

Real Estate


Clarity on taxation for REITS: Exemption of long-term capital gains for sponsors Rental income accorded tax pass through status

at REIT level

Issues of double taxation resulting in low yields

Positive for developers with strong annuity portfolio. However, need clarity on DDT at SPV level to make REIT structure efficient

Key beneficiaries: DLF, Phoenix Mills, Prestige Estates and Oberoi Realty

Step closer to implementation of REITs; however clarity on DDT at SPV level awaited

Housing for all by 2022 Increased planned outlay of Rs 100 bn for rural

housing and Rs 56 bn for urban housing in FY16

Allocation of Rs 80 bnand Rs 40 bn for rural and urban housing in FY15

Positive for all developers, especially affordable/ mid-income housing players

UNION BUDGET FY16


27 27

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UnionBudget2015-16