Budget sops that can send realty, aviation, tourism stocks soaring

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Budget sops that can send realty, aviation, tourism stocks soaring


NEW DELHI: Finance Minister Nirmala Sitharaman has over the past couple of months announced a slew of measures to revive demand for the Covid-hit sectors. While the focus of the forthcoming Budget is seen shifting from ‘growth’ to ‘repair’ and from ‘survival’ to ‘revival’, a host of Covid-hit sectors such as travel & tourism and real estate, among others, are eyeing budgetary sops.

For the hotel sector, the biggest wish has been to get an infrastructure status, as loans available to the asset-heavy sector attract as high as 15-20 per cent interest rate. The industry has sought that capital expenditure above Rs 25 crore be granted infrastructure status. At present, the status is granted only to hotels incurring capex of Rs 200 crore and above.



“If the hotel industry is granted infrastructure status, it can avail loans at lower interest rates for greenfield projects and will help them get water and electricity at industrial rates. It would be positive for Indian Hotels Company, Chalet Hotels, Lemon Tree Hotels, Jubilant FoodWorks and Speciality Restaurants,” Sharekhan said.

YES Securities said there are expectations that the government may allow business losses to be carried forward for up to 12 years, instead of eight years now, and there could be easing of tax for hotels from 34.94 per cent at present, to help increase cash flows. Hopes are also high of credit-guaranteed loans to the sector.

The tourism industry, as a whole, is asking for deferral of all statutory dues at the state government level such as excise fees, levies, taxes, power and water charges, and also deferral of renewal periods for all permits, licences, bank guarantees and security deposits across the tourism, travel, hospitality and aviation industry by 12 months.

Such a step would be positive for aviation companies SpiceJet and InterGlobe Aviation as well as hotels.

The tourism industry is also seeking to be brought under the ‘concurrent list’ by amending Schedule VII of the Constitution. “It would be ideal for each state to remove certain regulatory and licensing requirements that are currently in place to ease costs and the process of doing business,” said Sharekhan. “Thus, a more defined approach will be adhered to for the tourism sector, which would be driven by the unique needs of each state,” it said.

In the case of real estate, a Rs 2 lakh rebate is available on housing loan interest rates under Section 24 of the IT Act. There are expectations that this could be increased to at least Rs 5 lakh. If that happens, real estate stocks such as DLF, Godrej Properties, Prestige Estates, Brigade Enterprise, Ashiana Housing would be in focus.

It would also be positive for building material players such as Kajaria Ceramics, Century Plyboards, Astral Poly Technik and Supreme Industries, brokerages said.

The real estate sector is also seeking a GST waiver for a limited period. So far, the rate on under-construction properties is 5 per cent (minus the input tax credit benefit) for premium homes worth over Rs 45 lakh. The rate is 1 per cent for affordable homes (less than Rs 45 lakh).

The sector is also seeking a higher deduction under Section 80C up to Rs 1.5 lakh against principal repayment of housing loan, which is currently clubbed with other tax savings

“When it comes to investment in REITs, which have become a favoured route to raise funds for developers with renting-bearing commercial properties, an investment of up to Rs 50,000 should be allowed as a deduction under Section 80C. Also the holding period for REITs to qualify for long-term capital gain should be reduced from 36 months to 12 months, a step which will spur retail investment in value-creating instruments like REITs,” said Krish Raveshia, CEO at Azlo Realty.

Edelweiss said the government may look to support the bounce in the real estate sector by providing an extension to the PMAY-CLSS scheme, which is expiring at end of March 2021, which would also be in line with the government’s vision to provide Housing for All by 2022.

Meanwhile, public health has become very critical of late and further investments in public health infrastructure would be keenly awaited.

The vaccination rollout will be a very large project involving significant government expenditure. The outlay for this mega project and possible funding structure could become critical aspects of the budget, analysts said.





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