IRCTC IPO 2019 – Issue Details, Balance Sheet & Company Highlights

Impact of Tax Proposals on key sectors: “Setup in India” - An invitation letter to global investors The tax break announcements today were a big shot in the arm though a tax reform. However, one needs to see this with a bit of pragmatism. Several key sectors like Cement, Power, Steel, Mining have incentives from capex under sections such as 80 IA; while sectors like Auto are broadly between 27-32% - but need efforts on the demand side to deliver growth. Hence the beneficiaries of these will be limited to select sectors and companies.The government had already moved to 25% tax (in Budget June 2019) for companies having revenues upto Rs 400 crores which, as per government data, would have covered 99.3% of the companies. We analysed the data of companies listed on BSE with turnover greater than Rs 1 cr – these totalled to 6082 companies – and the total tax payout as of their financial year end accounted to totally Rs 202,592 cr (on a standalone basis) 4874 companies (80% of companies) with turnover from Rs 1cr – 400cr, contribute to 2.4% of the total tax paid by these – the companies had already received the benefit in Budget in June 2019 for 25% tax 1207 companies (20% of the companies) with turnover of Rs 400 cr and above contribute to 97.6% of the total tax paid i.e. Rs.197,737cr – and are now falling under the purview of the new benefit, subject to incentives The move is a positive reform for BFSI stocks – “the biggest beneficiaries” - (though not intended for them alone), as they will see a direct reduction in their tax outgo, which will directly and positively impact ROEs and internal accruals, which in turn will add to the core Tier 1 capital. There will be write down of deferred tax assets for companies, hence will impact P&L to that extent. Net impact from tax benefit announced will be lower this year i.e. FY20 in a scenario of DTA writeback and higher from FY21 onwards.These reforms are definitely sentimentally positive and a signal to the government’s inclination to addressing issues of various industries. However we expect fiscal deficit to be closely watched and would need fast paced efforts from the government to address the same in the form of large divestments in PSUs, listing of large unlisted PSUs such as IRCTC and divestment of land holding under central government amongst others.Expect “Make in India” to witness a significant boost with competitive tax rates in South East Asia.The tax cut to 15%+ surcharge for new manufacturing units / setups, makes India’s tax rate more competitive than some of its Asian peers (like China and Malaysia). It’s virtually an invitation to global corporations to setup their operations in India at the most competitive tax rate than peers.India is now even more competitive than Bangladesh, which has been quite competitive in textiles. India however would be lesser attractive than Vietnam, which recently had cut its tax rates to woo large corporates affected by the US-China trade dispute. The President of the US-India Strategic and Partnership Forum (USISPF) Mukesh Aghi in recent media interactions indicated that they are in talks with ~200 American companies, which are willing to move their manufacturing base from China to India. Also, in June 2019, as per a survey conducted by quality control and supply chain auditor QIMA on companies leaving China, 80% of American and 67% European Union companies have showed their intent. With a reduction in the corporate tax rates, gates for India open up as India would now look attractive. Also, higher labour costs in China make India a better alternative. Country Corporate tax rate South Korea 11.00-24.20% Taiwan 17.00% Malaysia 24.00% Thailand 20.00% Indonesia 12.50- 25.00% China 25.00% India 25.17% (15%+ for new setups) Vietnam 20.00% Click here to download the report Research Desk Disclaimer: This document is STRICTLY for authorised recipients only and is prepared for information purposes only. The information provided herein, we believe, is from reliable sources. IndiaNivesh is not liable for the accuracy of the source data as well as the results of the calculations based on the same. We do not claim that the data provided herein is accurate and complete in all respects. This is not an offer or solicitation of any offer to buy or sell securities. No action is intended to be taken by the recipients based on this document. 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NIIT Limited Buyback Board of Directors of the Company at its meeting Approved a proposal for buyback of up to 2,68,00,000 fully paid-up Equity Shares of the Company of face value Rs. 2 each, being 15.99% of the total issued and paid up equity share capital of the Company.Nivesh ViewAs per shareholding data available in FY 2018-19 annual report, acceptance ratio comes around 25% for retail shareholders.**Retail shareholders are classified as the one’s who hold shares of market value upto 2 lakhs on the record date. Profitability in various Scenario*Calculations are made on basis of purchasing 1600 shares. After buyback , remaining shares are assumed to be sold at CMP. Other Information about the Buyback Members of the promoter and promoter group of the Company have indicated their intention to participate in the proposed Buyback. The Entire procedure might take approximate 2 months. Dharmesh KantHead - Retail Research+91 22 6240 6402dharmesh.kant@indianivesh.in    )