The government has pushed the pedal on reforms by clearing the ordinance to amend the Land Acquisition Act.
Land purchases for five purposes, i.e. infrastructure projects, affordable housing, industrial corridors, defense purposes, and rural infrastructure, have been exempted from both the consent clause and the social impact assessment.
The market has taken the decision positively and infrastructure stocks have rallied nearly 7 per cent in anticipation of a pick-up in business.
"We see the changes on provisions pertaining to land purchases for the five above-mentioned uses as a positive for medium-term demand. However, there has been no change pertaining to land acquisition for private projects, including industries," stated a Morgan Stanley report.
The brokerage is of the view that the cement industry is expected to benefit from the Land Act. "We, thus, believe that capacity addition will take longer, which is positive for medium-term supply demand balance and earnings trajectory of the industry. In our view, companies that have brownfield expansion potential will benefit on a relative basis," the report added.
According to Hemang Jani, Senior Vice President, Sharekhan, amendments to the Land Acquisition Bill are aimed at easing some of the clauses that could have acted as a deterrent for the industry, real estate companies and infrastructure developers.
"The ordinance is favourable for a host of companies from these sectors, including Larsen & Toubro, IRB Infra, IL&FS Transportation, DLF and Unitech, among others," he said.
Goldman expects Power Grid to find it easier to get right of way (RoW) for T&D projects, while Container Corporation of India will benefit through faster implementation of industrial corridors and L&T will gain as the execution on PPP projects picks up pace.
Meanwhile, Nomura in its note said the land acquisition law passed by the previous government in 2013 had made land acquisition a very cumbersome process for the industry, and was proving to be a major bottleneck in the current government's effort to revive infrastructure development and greenfield investment.
"Like the previous ordinances, though, this again underlines the government's commitment to reforms, but investors may still choose to wait for parliamentary approval before taking up fresh projects, as there is a risk that the stalemate between the government and the opposition parties continues in the next session and the ordinances lapse," the report added.
Land purchases for five purposes, i.e. infrastructure projects, affordable housing, industrial corridors, defense purposes, and rural infrastructure, have been exempted from both the consent clause and the social impact assessment.
The market has taken the decision positively and infrastructure stocks have rallied nearly 7 per cent in anticipation of a pick-up in business.
"We see the changes on provisions pertaining to land purchases for the five above-mentioned uses as a positive for medium-term demand. However, there has been no change pertaining to land acquisition for private projects, including industries," stated a Morgan Stanley report.
The brokerage is of the view that the cement industry is expected to benefit from the Land Act. "We, thus, believe that capacity addition will take longer, which is positive for medium-term supply demand balance and earnings trajectory of the industry. In our view, companies that have brownfield expansion potential will benefit on a relative basis," the report added.
According to Hemang Jani, Senior Vice President, Sharekhan, amendments to the Land Acquisition Bill are aimed at easing some of the clauses that could have acted as a deterrent for the industry, real estate companies and infrastructure developers.
"The ordinance is favourable for a host of companies from these sectors, including Larsen & Toubro, IRB Infra, IL&FS Transportation, DLF and Unitech, among others," he said.
Goldman expects Power Grid to find it easier to get right of way (RoW) for T&D projects, while Container Corporation of India will benefit through faster implementation of industrial corridors and L&T will gain as the execution on PPP projects picks up pace.
Meanwhile, Nomura in its note said the land acquisition law passed by the previous government in 2013 had made land acquisition a very cumbersome process for the industry, and was proving to be a major bottleneck in the current government's effort to revive infrastructure development and greenfield investment.
"Like the previous ordinances, though, this again underlines the government's commitment to reforms, but investors may still choose to wait for parliamentary approval before taking up fresh projects, as there is a risk that the stalemate between the government and the opposition parties continues in the next session and the ordinances lapse," the report added.
Source: http://economictimes.indiatimes.com/
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