Big risks in Petronet LNG’s US deal, which sectors will benefit from tax cuts; all this and more on Moneycontrol Pro

As per the MoU, Petronet and its affiliates plan to explore the possibility of purchasing of up to 5 million tonnes per annum of LNG and picking up an equity stake in the US firm’s Driftwood project.

Moneycontrol.com September 25, 2019 11:39:08 IST
Big risks in Petronet LNG’s US deal, which sectors will benefit from tax cuts; all this and more on Moneycontrol Pro
  • Petronet will spend $2.5 billion for an 18% equity stake and purchase of 5 million tonnes of gas per annum

  • NALCO's m-cap has seen an erosion of 5.9% in the last 10 years, 5% in 5 years and 29% in the past one year

  • The cut in the corporate tax rate, in turn, is anticipated to have a domino effect on demand across sectors

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What will the lower 15 percent tax rate do for existing companies?

The government will allow all those companies that manufacture something and are incorporated after 1 October and start production before 31 March 2023, a concessional tax rate of 15 percent. If time travel was possible then investors would like to go ten years into the future to see how this 15 percent tax rate pans out. Nothing so drastic has been tried out without as much as issuing a consultation paper or presenting the underlying assumptions behind it. It could be a damp squib or it could transform the face of Indian manufacturing. Read more.

Big risks in Petronet LNGs US deal which sectors will benefit from tax cuts all this and more on Moneycontrol Pro

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There are big risks in Petronet LNG’s US deal

Earlier this week, Petronet LNG signed a deal with US natural gas company Tellurian. As per the MoU, Petronet and its affiliates plan to explore the possibility of purchasing of up to 5 million tonnes per annum of LNG and picking up an equity stake in the US firm’s Driftwood project. Petronet will spend $2.5 billion for an 18 percent equity stake and purchase of 5 million tonnes of gas per annum. The purchase deal is valid for 40 years. For an energy deficient country like India, Petronet’s deal makes a lot of sense. However, the devil is in the details. Read more.

Is NALCO hiding its faulty capital allocation behind hefty dividends?

National Aluminium Company (NALCO) made this interesting statement to the exchanges recently, “Continuing its bull run, NALCO has once again brought cheer in the stock market by declaring record dividend payout of Rs 1,072.73 crore for 2018-19”. But it did not mention that in this supposed bull run, Nalco’s market capitalisation has seen an erosion of 5.9 percent in the last 10 years, 5 percent in the last five years and 29 percent in the past one year. What gives? Read more.

Which paper stock should be on investors’ radar?

Stocks of paper companies rallied earlier this month following news that the government is likely to ban single-use plastics. The nationwide ban — the details of which are being finalised by the government — is expected to be announced on 2 October, the birth anniversary of Mahatma Gandhi. With paper being one alternative to plastic, the reaction was logical. But the big question on investors’ mind is this: was the sharp move up another knee-jerk reaction or is the rally sustainable especially with margins of paper companies already at a decadal high? Read more.

Tax cuts: Which sectors will benefit?

The cut in the corporate tax rate to 25 percent across sectors is seen as a huge boost for investment, as it will bring Indian tax rates at par with other economies. This, in turn, is anticipated to have a domino effect on demand across sectors. In this piece, our in-house research team will look at some of the major consumption-oriented sectors and how it will affect individual companies. Read more.

Picks from our technical analysts

Maruti: The stock of Maruti is in an uptrend but trades near an important resistance level. If it breaks nearby resistance level, the next level is around 7,500. Click here for a profitable options trading strategy.

Bank Nifty: This index is now at a crucial zone. After a monster 4000 points move it has formed a pennant in the last two days. Click here for a futures trading strategy.

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