GIDC decision: Industry bears the brunt! (AKD Daily, Aug 13, 2020)
AKD Daily
GIDC decision: Industry bears the brunt!
- In today’s release of the 2017 registered Supreme Court case decision on Gas Infrastructure Development Cess (GIDC), the Court, in an affirmation of the Govt’s stance, has reportedly directed complete recovery of GIDC payables from the industries until 2018 (PkR417bn as of Dec’18, as per GoP draft proposal submitted to senate).
- While we await further clarity, key repercussions for industry profitability hinge on the timeline of GIDC payments (runway for payment would cushion cashflows), where we understand that on an face value, significant cash outflow of PkR20-60bn for Fertilizer sector may occur, hampering liquidity in the medium term.
- In terms of earnings impact, leveraging remains a key mode for financing payments, with potential bridge financing as a method to pay accrued GIDC payables, where absence of other income may result in negative earnings impact (most significant for FFC and FFBL).
- For Construction, we expect a muted impact with only LUCK, MLCF and DGKC among the AKD Cement Universe to be affected where we estimate the impact at PkR8.8-11.1/0.3/2.3/sh for LUCK/MLCF/DGKC.
- While ECC removed prospective GIDC application on Fertilizer sector w.e.f 20th Jan’20 (PkR300/150 per bag on feed/fuel), we await clarity on the same w.r.t GIDC for other industrials (Cements, Steel and Chemicals).
AKD Research
AKD Securities Ltd. is one of the leading securities firm in Pakistan, providing a comprehensive range of investor focused services, including equity brokerage, economic and securities research, investment banking and financial advisory services. AKD Securities accounts for more than 6% of the average daily value of the Karachi Stock Exchange. AKD Securities was the first brokerage house to launch an online trading platform in Pakistan in November 2002 and now has the largest market share with over 6000 customers. This has helped diversify and expand the retail investor base in the country and ushered in a whole new universe of investors to the stock market.
AKD Securities Ltd. caters to a diversified group of domestic and international institutional investors, high net worth individuals and upscale retail clients, including expatriate Pakistanis. With high quality research, unparalleled execution and distribution capability for both regular and large block trades, AKD Securities Ltd. has earned an outstanding reputation in the Pakistani securities industry.Outside of commercial banks, AKD Securities Ltd. is one of the biggest capital market firms in the country. AKD Securities is the leader in raising and providing risk capital in underwriting, market making and mergers and acquisitions in Pakistan. Good corporate governance and professionalism are emphasized throughout the firm and AKD Securities Ltd. is amongst the very few companies to have introduced a firm-wide comprehensive CODE of ETHICS, overseen by an independent compliance manager.Ultimately, our success is based on the quality of service we provide to our customers and the trust and confidence reposed in us by them. Our focus, therefore, remains on customer satisfaction at all levels in the company.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.