Budget FY2021-22

June 12, 2021

Federal Budget FY22

The penultimate chapter – Growth back in focus

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Budget FY2021-22
The penultimate chapter – Growth back in Focus June 12, 2021

IIS Research research@ismailiqbal.biz Phone: (+92-21) 34302184

2
Budget FY2021-22
Pro-growth budget with ambitious fiscal targets June 12, 2021

The Government has announced its third budget, which is focused towards stimulating growth, after Medium Term Macroeconomic Indicators
achieving stabilization. The number of relief measures outweigh the revenue measures, where the FY21B FY21R FY22B FY23F FY24F
goal is to achieve revenue targets through growing the size of the economy rather than burdening Real GDP Growth (%) 2.1 3.9 5.0 5.7 6.4
existing tax payers with new taxes. Inflation (%) 6.5 9.0 8.2 7.2 6.4
GDP - MP (PKR'bn) 45,567 47,709 53,867 60,811 70,151
We believe that the economic growth targets set by the Govt. would help in increasing revenue base As % of GDP
as most of the indirect taxation is linked to external trade. Having said that, achieving 24% growth in Total Federal Revenue 14.4 13.4 14.7 14.9 14.9
revenue (FY22B: PKR7.9tr) would still be an uphill task. With no major tax measures, increasing direct
Tax Revenue 10.9 9.8 10.8 11.5 11.8
tax collection by 22% (PKR393bn) would be difficult.
Non Tax Revenue 3.5 3.6 3.8 3.3 3.0
Total Federal Expenditure 15.7 15.4 15.8 14.6 13.2
On non-tax revenue front, one of the major challenges on that front would be to accomplish
Current 13.9 13.8 14.0 12.8 11.4
Petroleum Levy Target, which has been set at hefty PKR610bn vs revised number of PKR500bn for
Development 1.7 1.6 1.8 1.8 1.8
FY21. To highlight, our estimate indicates that the PL collection would clock in at PKR418bn in FY21,
as the Govt. has reduced PL to very low levels of PKR4.8/litre. Other challenges to non-tax revenue Fiscal Balance -7.0 -7.1 -6.3 -5.3 -3.9
collection include GIDC target of PKR130bn vs PKR25bn in FY21, and dividends of PKR90bn vs Primary Balance -0.5 -1.2 -0.7 0.2 1.2
PKR40bn in FY21. Thus, the fiscal deficit might come in higher than the target of 6.3% of GDP. Public Debt 87.6 83.1 81.8 79.1 73.9
Source: Budget documents, IIS Research *B=Budget, R=Revised
From the equity market perspective, the budget is a positive one, where various incentives have been
offered to businesses/capital markets including i) reduction in CGT to 12.5%, ii) duty concessions on
raw materials, iii) increase in PSDP allocation to PKR900bn, iv) zero rating for IT sector, and v) removal
of WHT on banking transactions.

Some of the major proposals which did not materialize include i) reduction in FED on cements, ii)
lower tax rate for Banks, iii) restoring relief on intercorporate dividend and iv) restoring tax credit for
new listings on PSX.

We believe that the clear winners of this budget would be Construction & Allied sector, Automobiles,
IT and Pharmaceutical. Some of the key beneficiaries of this budget include PSMC, ASL, ISL, MTL,
AGTL, SYS, AVN, NETSOL, QUICE, SHEZ, and MUREB.

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Budget FY2021-22
A look at historical post-budget performance of KSE100 June 12, 2021

KSE100 Sectorwise Performance

The market generally reacts well to the growth budgets, while we expect this trend to continue post FY22 budget. Sectors FYTD
VANASPATI & ALLIED INDUSTRIES 590.3%
TECHNOLOGY & COMMUNICATION 166.7%
However, it is important to highlight that the market has recently performed well in run-up to the budget (+7.5% REFINERY 158.5%
since the new finance minister took office on 17-Apr-21), anticipating a business friendly budget. Overall the ENGINEERING 96.6%
GLASS & CERAMICS 93.6%
KSE100 index is up 40% FYTD, where most of the sectors who are beneficiaries of current budget have already CEMENT 83.3%
outperformed the broad market. LEATHER & TANNERIES 79.9%
SYNTHETIC & RAYON 66.4%
PAPER & BOARD 65.3%
We believe, cements still have decent upside potential (despite no reduction in FED), while pharmaceuticals may WOOLLEN 58.7%
TEXTILE COMPOSITE 54.3%
also come in limelight due to lower than historical multiples. Apart from the budget, banking sector is also CABLE & ELECTRICAL GOODS 51.9%
trading at cheap multiples and can gain investor’s attention. AUTOMOBILE ASSEMBLER 51.7%
CHEMICAL 40.6%
KSE100 Index 40.3%
POWER GENERATION & DISTRIBUTION 32.1%
Post-Budget KSE100 Index Performance AUTOMOBILE PARTS & ACCESSORIES 31.3%
Fiscal Year FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 TEXTILE WEAVING 30.2%
OIL & GAS MARKETING COMPANIES 27.0%
Announcement date 13-Jun 5-Jun 3-Jun 1-Jun 12-Jun 3-Jun 5-Jun 3-Jun 26-May 26-Apr 11-Jun 12-Jun TRANSPORT 23.9%
COMMERCIAL BANKS 23.0%
KSE-100 Index level LEASING COMPANIES 17.4%
Budget day 7,056 9,637 12,237 13,877 22,325 29,506 34,012 37,223 52,637 45,461 34,660 34,611 PHARMACEUTICALS 15.2%
INSURANCE 10.9%
30 Days 7,503 9,698 12,484 13,801 22,985 29,698 35,456 37,967 46,332 42,074 33,875 36,619 FERTILIZER 10.1%
90 Days 8,996 9,753 11,071 15,254 22,992 28,494 34,397 39,739 42,269 42,089 30,955 42,531 INV. BANKS / INV. COS. / SECURITIES COS. 7.9%
CLOSE - END MUTUAL FUND 6.7%
180 Days 8,905 11,222 11,533 16,424 24,999 31,300 32,393 42,622 40,592 37,715 40,443 43,266 REAL ESTATE INVESTMENT TRUST 0.6%
Market Return (%) OIL & GAS EXPLORATION COMPANIES -0.9%
MISCELLANEOUS -3.0%
30 Days 6% 1% 2% -1% 3% 1% 4% 2% -12% -7% -2% 6% MODARABAS -3.1%
FOOD & PERSONAL CARE PRODUCTS -8.3%
90 Days 27% 1% -10% 10% 3% -3% 1% 7% -20% -7% -11% 23%
SUGAR & ALLIED INDUSTRIES -9.7%
180 Days 26% 16% -6% 18% 12% 6% -5% 15% -23% -17% 17% 25% TOBACCO -23.6%
TEXTILE SPINNING -27.1%
Source: Bloomberg, IIS Research

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Budget FY2021-22
Budget Outlay set at PKR8.5tr June 12, 2021

The budget consists of an estimated outlay of PKR 8,487bn, up by 16% from the last Other, PKR 124,
year’s revised budget figures. The major growth has been witnessed in Subsidies (+59% Government
1%
Development,
YoY) and Grants and Transfers (+25%). Expense, PKR PKR 964, 11%
479, 6%

Revenue: Federal govt. has estimated total receipts of PKR 7,909bn in FY22 vs PKR
Provinces, PKR
6,395bn in the last year. The incumbent govt. estimates growth in revenue will largely 1168, 14%
come from the indirect taxes of PKR 3,647bn (+26% YoY) in FY22 vs PKR 2,902bn in
FY21. Another round of growth in the revenues are estimated from the 22% YoY Debt Financing,
PKR 3060, 36% Budget Outlay: PKR8.5tr
growth in non tax revenues on the back of higher Petroleum Levy (i.e. PKR 610bn) &
Subsidies, PKR
GIDC collection (i.e. PKR 130bn) targets. 682, 8%

Expenditure: Interest payments would take away the largest chunk of PKR 3,060bn
Pension, PKR
(i.e. 36%) from the total expenditures followed by the Defence Services allocation of 640, 8%
PKR 1,370bn (16%). Favorably titled towards inducing growth, total development
Defence, PKR
outlay has been increased by 61% YoY to record at PKR 2,135bn, with Federal PSDP 1370, 16%
constituting PKR 900bn this year.

Growth target: Govt. has set real GDP growth target of 5% for FY22 vs 3.9% in the FY21
along with the inflation target of 8.2% vs 9% in the FY21.

Fiscal deficit: Fiscal deficit for FY22 is budgeted at PKR 3,420bn (6.3% of GDP) vs PKR
3,388bn (7.1% of GDP). Primary deficit is set to be increased to 0.7% of GDP (PKR
360bn) in FY22 vs 1.1% in the FY21.

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Budget FY2021-22
Budget at a glance June 12, 2021

Fiscal Snapshot Change as % of GDP

PKR'mn FY21B FY21R FY22B YoY YoY % FY20B FY20R FY21B
Revenues
FBR Taxes 4,963 4,691 5,829 1,138 24.3% 10.9% 9.8% 10.8%
-Direct 2,043 1,789 2,182 393 22.0% 4.5% 3.7% 4.1%
-Indirect 2,920 2,902 3,647 745 25.7% 6.4% 6.1% 6.8%
Customs 640 700 785 85 12.1% 1.4% 1.5% 1.5%
Sales Tax 1,919 1,927 2,506 579 30.0% 4.2% 4.0% 4.7%
FED 361 275 356 81 29.5% 0.8% 0.6% 0.7%
Non - Tax revenue 1,610 1,704 2,080 376 22.0% 3.5% 3.6% 3.9%
SBP Profit 620 700 650 (50) -7.1% 1.4% 1.5% 1.2%
Petroleum Levy 450 500 610 110 22.0% 1.0% 1.0% 1.1%
PTA (3G/4G Licences) 27 34 45 12 34.1% 0.1% 0.1% 0.1%
Dividends 61 40 90 50 124.1% 0.1% 0.1% 0.2%
GIDC 15 25 130 105 420.0% 0.0% 0.1% 0.2%
Others 452 430 684 254 59.0% 1.0% 0.9% 1.3%
Gross Revenue 6,573 6,395 7,909 1,514 23.7% 14.4% 13.4% 14.7%
Less: Provincial Share 2,874 2,704 3,412 708 26.2% 6.3% 5.7% 6.3%
Net Revenue 3,700 3,691 4,497 806 21.8% 8.1% 7.7% 8.3%

Expenditure
Current Expenditure 6,343 6,561 7,523 962 14.7% 13.9% 13.8% 14.0%
Mark-up 2,946 2,851 3,060 209 7.3% 6.5% 6.0% 5.7%
Defence 1,286 1,295 1,370 75 5.8% 2.8% 2.7% 2.5%
Grants and Transfers 905 932 1,168 235 25.2% 2.0% 2.0% 2.2%
Government expenses 477 488 479 (9) -1.8% 1.0% 1.0% 0.9%
Pension 470 470 480 10 2.1% 1.0% 1.0% 0.9%
Pay and pension - - 160 160 na 0.0% 0.0% 0.3%
Subsidies 209 430 682 252 58.6% 0.5% 0.9% 1.3%
Contingencies 50 - 25 25 na 0.1% 0.0% 0.0%
Disaster/Emergency/Covid - 95 100 5 na 0.0% 0.2% 0.2%
-
Development Expenditure 794 786 964 178 22.6% 1.7% 1.6% 1.8%
Federal PSDP 650 630 900 270 42.9% 1.4% 1.3% 1.7%
Total Expenditure 7,137 7,347 8,487 1,140 15.5% 15.7% 15.4% 15.8%
Provincial surplus 242 268 570 302 112.7% 0.5% 0.6% 1.1%
Fiscal Balance (3,195) (3,388) (3,420) (32) 1.0% -7.0% -7.1% -6.3%
Primary Balance (249) (537) (360) 177 -32.9% -0.5% -1.1% -0.7%
GDP 45,567 47,709 53,867 6,158 12.9%
Source: MoF, IIS Research *B=Budget, R=Revised

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Budget FY2021-22
Govt target of petroleum levy collection warrants significant price increase June 12, 2021

Petroleum Levy collection at diff. PL levels & growth in POL Sales

The incumbent govt has set an ambitious target of PKR 2,079bn collection for the non- PL/litre
tax revenues, up by 22% from last year’s target. Petroleum Levy collection is estimated 212.0 5 10 15 20
at PKR 610bn vs PKR 500 target of FY21 (revised). We estimate that govt is expected to 3% 103 207 310 414

POL sales growth

5% 106 212 318 424
collect PKR 418bn PL against revised target of PKR 500bn for the ongoing fiscal year. 8% 109 217 326 434

(%)
10% 111 222 333 444
For FY22, we estimate PL collection target to miss the mark by a huge margin. PKR 13% 114 227 341 454
15% 116 232 348 464
650bn are unlikely to be collected at current PL levels of PKR4.8/share. In case
*POL sales comprise of HSD & Petrol only
international oil prices remain around USD 70/bbl. (current: 72.6/bbl.), govt is likely to
collect PKR 212bn. As per our working, to achieve the target, the petroleum levy would
Petrol price PKR/litre sensitivity to PL & International oil prices
have to be increased to PKR30/litre, which would imply petrol price of PKR128/litre. PL/litre
104.9 5 10 15 20
50 87 92 98 104

Arab Light $/bbl.

Oil price reaching to three-year high 60 98 104 110 116
70 109 115 121 127
100
80 121 127 132 138
90
90 132 138 144 150
80
100 144 149 155 161
70
60
50
40
30
20
10
0

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Budget FY2021-22
Subsidy allocations to witness June 12, 2021

Despite inconclusive talks with the IMF, Govt has allocated quite generous allocations Federal Subsidies-PKR Mn FY21B FY22B YoY
in the subsidies head. Major increase is witnessed in the Power sector on account of Power: 139,500 596,000 327%
2nd installment to Independent Power Producers, for which the Govt has set aside PKR WAPDA/PEPCO 129,000 245,000 90%
266bn. However, with no increase in the power tariff expected in the next fiscal year, KESC 10,500 85,000 710%
the incumbent govt must have to release full allocated amount in order to contain the PHPL & IPPs - 266,000 nm
Petroleum: 10,000 20,000 100%
menace of circular debt.
PASSCO 7,000 7,000 0%
Uitility stores corporation 3,000 6,000 100%
Along with these allocations, Govt has first time allocated PKR 3bn markup subsidy on Others 49,500 53,000 7%
Naya Pakistan Housing Scheme loans.
TOTAL 209,000 682,000 226%
Major heads of the Current expenditure are expected to witness minimal growth,
while subsidy & grants would witness the major growth.

Current expenditure Change as % of GDP

PKR'mn FY21B FY21R FY22B YoY YoY % FY20B FY20R FY21B
Current Expenditure 6,343 6,561 7,523 962 14.7% 13.9% 13.8% 14.0%
Mark-up 2,946 2,851 3,060 209 7.3% 6.5% 6.0% 5.7%
Defence 1,286 1,295 1,370 75 5.8% 2.8% 2.7% 2.5%
Grants and Transfers 905 932 1,168 235 25.2% 2.0% 2.0% 2.2%
Government expenses 477 488 479 (9) -1.8% 1.0% 1.0% 0.9%
Pension 470 470 480 10 2.1% 1.0% 1.0% 0.9%
Pay and pension - - 160 160 na 0.0% 0.0% 0.3%
Subsidies 209 430 682 252 58.6% 0.5% 0.9% 1.3%
Contingencies 50 - 25 25 na 0.1% 0.0% 0.0%
Disaster/Emergency/Covid - 95 100 5 na 0.0% 0.2% 0.2%

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Budget FY2021-22
Development at forefront June 12, 2021

Major uptick in Govt expenditures is expected to come from sizeable increase in the FY22 Federal PSDP- NHA to gain lion’s share
PSDP allocation. NHA would receive the highest allocation of PKR 114bn in FY22 as again
well. Key projects targeted by the Govt under PSDP are as follows:
114

i) Dasu Hydro Power Project PKR 57bn

ii) Diamer Basha Dam PKR 23bn. 103

iii) Mohamand Dam PKR 6bn.

iv) Neemum Jehlum Hydropower project PKR 14bn.V) 69
v) Karachi to Lahore Motorway 613
vi) Hawalian Tha kot Phase II patch.
vii) Zhob-Kachlak road.
viii) Improvement in NHA Water resource division NTDC Others

FY21 Federal PSDP Break up

PSDP allocation vs utilization
2,000 1.2
1,613 119
1,539 1,550 1
1,500 1,324
1,200 0.8
1,000 0.6
81
0.4
500
0.2 410
40
0 0
FY17 FY18 FY19 FY20 FY21

PSDP total allocation

NHA Water resource division NTDC Others

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Budget FY2021-22
June 12, 2021

Sectoral measures

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Budget FY2021-22 REP 092

PSX; many things to cheer June 12, 2021

• Capital gain tax on securities has been reduced to 12.5% from 15% for filers against PSX proposed rate of
10% (holding period less than 6 months) & 7.5% (holding period: 6-12 months).

• Overall minimum turnover tax reduced to 1.25% from 1.5%. Positive

• Collection of WHT on marginal financing by NCCPL has been ended.

• Exemption to Special Economic Zones enterprises from payment of minimum turnover tax is likely to
improve profitability of KIA Motors, Service Long March Tyres, PABC.

Sector/Category Measures/Reliefs Impact Company

PSX Capital gain tax reduced to 12.5% from 15% for filers Positive
PSX Turnover tax reduced to 1.25% from 1.5% Positive
PSX Collection of WHT on marginal financing by NCCPL ended Positive
LUCK (LMC), PABC
PSX Exemption to Special Economic Zones enterprises from payment Positive (IPO), SRVI (long
of minimum turnover tax. march)

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Budget FY2021-22 REP 092

Auto sector; PSMC and tractors to benefit June 12, 2021

• Sales tax has reduced from 17.0% to 12.5% on cars engine capacity upto 850cc along with the expected removal of
VAT. To further reduce the prices of lower car segments, FED of 2.5% has been abolished on small cars (upto 850cc
engine). This would bode well for PSMC as this is the only listed players dealing in small car segments.
Positive
• Incentives for the electric vehicles given by reducing sales tax to 1% supplied by local manufacturers and
exemption of sales tax on the import of CKD kits for electric vehicles. We believe this is neutral for the sector as
there no automobile manufacturers of electric vehicles.

• Interest free loan of PKR 200,000 for the purchase of Tractors and Machinery would push the demand of Tractors
and is expected to bode well for the listed space including MTL and AGTL.

Sector/Category Measures/Reliefs Impact Company

Automobiles Sales tax reduced from 17% to 12.5% on small cars engine Positive PSMC
capacity upto 850cc besides the expected removal of VAT
Automobiles FED on small cars upto engine capacity of 850cc may be removed. Positive PSMC
Currently, it is imposed at the rate of 2.5%
Automobiles Interest free loan of PKR 200,000 for the purchase of Tractors and Positive MTL, AGTL
Machinery
Automobiles Reduce 'on' money on vehicles by imposing collection of tax at Neutral
the time of registration
Automobiles Sales tax to be reduced to 1% on electric vehicles supplied by Neutral
local manufacturers
Automobiles Exemption of sales tax on import of CKD kits for electric vehicles Neutral
by manufacturers
Exemption of VAT on import of electric vehicles, CKD kits for small
Automobiles car , 2&3 wheelers and HCV besides the exemption of all these Neutral
categories in CBU condition

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Budget FY2021-22 REP 092

Steel: Reduction in duties to benefit the sector June 12, 2021

• Reduction/exemption of CD, ACD and RD on import of HRC and Stainless Steel. This would bode well for local CRC
manufacturers (ISL and ASL) as well as the tubular steel manufacturers (INIL, CSAP).
Positive
• Currently, the CD is reduced to 5% for CRC manufacturers and is exempted from RD, whereas tubular steel
manufacturers CD is 11% along with RD of 6%.

• 17% FED which is payable in sales tax mode removed on steel ingots, billets, ship plates, bars and other long re-
rolled profiles

Sector/Category Measures/Reliefs Impact Company

Steel Reduction/exemption of CD, ACD and RD on import of HRC and Positive ISL, ASL, CSAP & INIL
Stainless Steel.

Steel 17% FED which is payable in sales tax mode removed on steel Positive ASTL, MUGHL, AGHA
ingots, billets, ship plates, bars and other long re-rolled profiles

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Budget FY2021-22 REP 092

Information Technology: Steps in the right direction June 12, 2021

• Zero rating for IT sector exports. ICT tax ordinance amendment.

• Import of plant, machinery, raw material by special technological zone would be

exempted from sales tax. Positive
• FED on telecommunication reduced to 16% from 17%

• Reduced rate of withholding tax of 3% on telecom services.

• Inclusion of telecommunication service in definition of industrial undertaking.

• Cloud computing & data storage added to broad the scope of the sector.

Sector/Category Measures/Reliefs Impact Company

Information Technology Positive SYS, NETSOL, AVN
Zero rating for IT sector exports. ICT tax ordinance amendment.
Information Technology Import of plant, machinery, raw material by special technological Positive
zone would be exempted from sales tax
Information Technology FED on telecommunication reduced to 16% from 17% Positive PTC
Information Technology Reduced rate of withhodling tax of 3% on telecom. Services Positive PTC

Information Technology Inclusion of telecommunication service in defintion of industrial Positive

undertaking
Information Technology Cloud computing & data storage added to broad the scope of the Positive
sector.

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Budget FY2021-22 REP 092

Pharma: duty benefits on import of raw materials June 12, 2021

• Exemption of CD & ACD on more than 350 APIs.

• Concessionary rate of 5% on plant, machinery and equipment.

Positive
• Exemption of CD & ACD on 6 life-saving drugs.

• Sehat card facility for 4-6mn families

• Allocation of USD 1.1bn for COVID and related expenditures

• Exemption of CD & ACD on inputs of Ready to Use Supplemtary & Therapeutic
foods

Sector/Category Measures/Reliefs Impact Company

Exemption of CD & ACD on more than 350 APIs
Positive
Concessionary rate of 5% on plant, machinery and equipment
Pharma Exemption of CD & ACD on 6 life-saving drugs.
Sehat card facility for 4-6mn families
Allocation of USD 1.1bn for COVID and related expenditures
Exemption of CD & ACD on inputs of Ready to Use Supplemtary ABOT, ICI, IBLHL,
Pharma Positive
& Therapeutic foods SEARL

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Budget FY2021-22 REP 092

Other sectors June 12, 2021

Commercial Banks
• Collection of WHT on cash withdrawal ended

• Collection of WHT on other than cash transactions ended. Positive

• These developments are likely to increase banking deposit base along with the
reduction in the currency in circulation.

Sector/Category Measures/Reliefs Impact Company

Banks Collection of WHT on cash withdrawal ended Positive
Banks Collection of WHT on other than cash transactions ended Positive

Construction allied industries

• Allocation of diff projects; PKR 57bn for Dasu Hydropower porject, PKR 23bn for
Diamer Basha Dam, PKR 6bn Mohmand Dam, PKR 14bn Neelum Jehlum Hydro
Project.

Sector/Category Measures/Reliefs Impact Company

Allocation of diff projects; PKR 57bn for Dasu Hydropower
Construction allied industries porject, PKR 23bn for Diamer Basha Dam, PKR 6bn Mohmand Positive
Dam, PKR 14bn Neelum Jehlum Hydro Project.

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Budget FY2021-22 REP 092

Other sectors June 12, 2021

Cable & Electrical Goods

• Reduction/exemption of CD & ACD on raw materials for Electronics manufacturing
industry
Positive
Sector/Category Measures/Reliefs Impact Company
Cable & Electrical Goods Reduction/exemption of CD & ACD on raw materials for Positive PAEL, WAVES, SING
Electronics manufacturing industry
PKR 118bn for improving electricity transmission projects vs PKR EMCO, PAEL, SIEM,
Power, Cable Goods Positive
70.23bn in FY21 PCAL

Fertilizers
• Rate of advance tax on dealers has been reduced to 0.25% if their names are
appearing in ATL (Sales & Income tax)
Neutral
Sector/Category Measures/Reliefs Impact Company
Rate of advance tax on dealers reduced to 0.25% if their names
Fertilizers Neutral
are appearing in ATL (Sales & Income tax)

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Budget FY2021-22 REP 092

Other sectors June 12, 2021

Food & Personal Care Products Recommendations

• FED on Juice, syrups and squashes water (containing added sugar or sweetening
matter) withdrawn.
Positive
• FED on edible oils excluding deoxidized soybean removed.

• FED on vegetable ghee and cooking oil removed.

Sector/Category Measures/Reliefs Impact Company

QUICE, MUREB,
Food & Personal Care Products FED on Juices withdrawan Positive SHEZ,FFL, FCEPL,
MFFL, NESTLE

Footwear Positive
• Reduction of duties on raw material/inputs

Sector/Category Measures/Reliefs Impact Company

Footwear Reduction of duties on raw material/inputs Positive SRVI, BATA

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Budget FY2021-22 REP 092

Other sectors June 12, 2021

Chemicals
• Reduction/exemption of CD & ACD on raw materials for paint industry.

• Reduction/exemption of CD & ACD on raw materials for chemical & artificial Positive
leather industry.

Sector/Category Measures/Reliefs Impact Company

Reduction/exemption of CD & ACD on raw materials for
Chemicals Positive
chemical.

Refinery
• Exemption of income tax for 10 years on deep conversion new refineries
Sector/Category Measures/Reliefs Impact Company
Exemption of income tax for 10 years on deep conversion new
Positive
Refinery Positive NRL, BYCO, ATRL, PRL
refineries

Housing
• PKR 33bn subsidy allocated for low income housing scheme construction. (PKR 3
lacs/per household)

Sector/Category Measures/Reliefs Impact Company

PKR 33bn subsidy allocated for low income housing scheme Construction allied
Housing Positive
construction. (PKR 3 lacs/per household) industries

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Budget FY2021-22 REP 092

Other sectors June 12, 2021

Textile
• Reduction in duty on import of yarn will improve cost for the sector and will also
help the value added sector as yarn in local market is not enough for consumption.
Positive
• Improvement of Refund system which will boost cash flows.

Sector/Category Measures/Reliefs Impact Company

Reduction /Exemption of CD ACD RD on import of goods falling
Textile Positive
under 589(PCT code) to incentivize textile sector

Transport
• PKR 22bn allocated Jamshoro Coal power project. Completion of this project is likely to
result into increased coal handling volumes for the terminal.
Sector/Category Measures/Reliefs Impact Company
PKR 22bn allocated Jamshoro Coal power project
Transport Positive PIBTL Positive
Sugar
• Exemption of income tax on bagasse fired power units and reduced rate of tax on dividends
from such projects. Overall sector impact is positive as almost all players have Bagasse fired
power units.

Sector/Category Measures/Reliefs Impact Company

Exemption of income tax on bagasse fired power units and
Sugar Positive
reduced rate of tax on dividends from such projects
Source: IIS Research, Budget documents

IIS Research research@ismailiqbal.biz Phone: (+92-21) 34302184 20

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Disclaimer
Ismail Iqbal Securities (Pvt.) Limited does not warrant the timeliness, sequence, accuracy or completeness of this information. In no event will Ismail Iqbal Securities
(Pvt.) Limited be liable for any special, indirect, incidental, or consequential damages without limitation which includes lost revenues, lost profits, or loss of
prospective economic advantage resulting from the use of the information or for any omission or inaccuracies resulting from the use of information from this market
Disclosures
Ismail Iqbal Securities (Pvt) Limited, hereinafter referred to as IISPL, acts as a market maker in the security(ies) mentioned in this report. IISPL, its officers, directors,
associates or their close relatives might have financial interests in the security(ies) mentioned in this report, including a significant financial interest (1% of the
value of the securities of the subject company). IISPL is doing business, or seeking to to do business, with the company(ies) mentioned in this report, and therefore
receives/has received/intending to receive compensation from these company(ies) in a non-research capacity.
IISPL has previously or might in the future trade or deal in the subject company in a manner contrary to the recommendation in this report, due to differences of
opinion between the research department and sales desk or traders, and investment time period differences.
The analyst associated with the writing of this report either reports directly to the research department head or is the department head. The department head in
turn reports directly to the Chief Executive Officer of IISPL. The analyst's compensation is not determined by nor based on other business activities of IISPL.
Research reports are disseminated through email or mail/courier to all clients at the same time. No class of client or internal trading person gets this report in
advance of other clients. Due to factors outside of IISPL's control, including speed of the internet, some clients may receive the report before others.
Monetary compensation of research analysts is neither determined nor based on any other service(s) that IISPL offers, and the compensatory evaluation is not
influenced nor controlled by anyone belonging to a non-research department. Further, the research analysts are headed by the Head of Research, who reports
Recommendations are based on the following conditions:
Rating criteria Stance
(Target Price/Current Price - 1) > 10% Positive
(Target Price/Current Price - 1) < -10% Negative
9% > (Target Price/Current Price -1) > -9% Neutral
Investors should carefully read the definitions of all rating used within every research report. In addition, research reports carry an analyst’s independent view and
investors should ensure careful reading of the entire research reports and not infer its contents from the rating ascribed by the analyst. Ratings should not be used or
relied upon as investment advice. An investor’s decision to buy, hold or sell a stock should depend on said individual’s circumstances and other considerations.
Valuation Methodology
To arrive at our period end target prices, IISPL uses different valuation methadologies including
Discounted cash flow (DCF, DDM)
Relative Valuation (P/E, P/B, P/S etc.)
Equity & Asset return based methodologies (EVA, Residual Income etc.)
Analyst Disclaimer
The author(s) of this report hereby certifiies that this report accurately reflects her/his/their own independent opinions and views as of the time this report went
into publication and that no part of her/his/their compensation was, is or will be affected by the recommendation(s) in this report.
The research analyst or any of her/his/their close relatives do not have a financial interest in the securities of the subject company aggregating more than 1% of the
value of the company and the research analyst or their close relatives have neither served as a director/officer in the past 3 years nor received any compensation
from the subject company in the past 12 months. The Research analyst or her/his/their close relatives have not traded in the subject security in the past 7 days and
will not trade for 5 days post publication of the report.

IIS Research research@ismailiqbal.biz Phone: (+92-21) 34302184 21

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