Mumbai: Friday’s tax cuts could boost corporate profitability and cash flows that is likely to be used by India Inc for debt reduction and capex growth.
According to ICICI Securities, “the immediate benefit is increased cash flows to corporate India that will be either channelised into debt reduction or incremental investments in increasing capacity.”
The brokerage expects a 6 per cent EPS upgrade for Nifty companeis as earnings growth is likely to be in the range of 20 per cent against current 16.9 per cent.
The beneficiaries are companies in sectors like banking and FMCG as they are expected to grown at a CAGR of 48.2 per cent and 18 per cent respectively in FY19-21 from earlier rate of 42.2 per cent and 12.2 per cent, analysts said.
“The tax measures announced...give India a competitive slot amongst the leading economies of the world in the corporate tax rate table,” said Gautam Mehra, Partner and Leader Tax & Regulatory, PwC India.
The concessional 15 per cent tax on new investment in manufacturing will provide level playing fields to local manufacturers, said said Kamal Nandi, Business Head & EVP, Godrej Appliances and Presi-dent, CEAMA. “It is expected to boost the manufacturing sector,” he said....