EXPECTED BUDGET IMPACT: Positive
LONG TERM OUTLOOK: Cautious
Order inflows for the construction sector have remained subdued since past twothree years due to issues related to policy decisions, delays in environmental clearance and land acquisition. Steep increase in interest rates coupled with lack of fund raising by the companies also deteriorated the balance sheet of companies.
We expect Union Budget 2013-14 to be positive for the infrastructure sector with higher budgetary allocations in different segments such as roads, irrigation, urban infra, ports, airports, power etc which had been impacted by lack of order inflows and delays in implementation during the current fiscal 2013. We expect infrastructure companies to benefit positively in terms of higher order inflows going forward. However, the increase in allocation may be muted.
We also expect further progress on National Investment Board which provides a single window clearance to large sized projects and ease the bottlenecks being faced by several projects. In order to ease the funding requirement for the sector, industry expects an efficient and vibrant corporate debt market to meet the long term funding requirements for the sector. To improve the viability of the infrastructure projects, industry expects MAT to be abolished for the tax holiday period under Section 80IA benefits; though we don't expect the same to happen.
We thus expect budget to address issues such as order inflows across various segments. We would continuously watch out for order inflows, easier funding of projects as well as viability of the projects going forward which will result in reviving the entire sector.
Key beneficiaries from higher order inflows in roads, irrigation and urban infra are expected to be IL&FS transportation network, IRB Infra, IVRCL, NCC, Pratibha Industries, Unity Infraprojects.