*Mr. Vinay Pandit, Head- Institutional Equities, IndiaNivesh
“This is the budget to boost income and enhance purchasing power” at the beginning gives a sign of things to come – expect significant benefits for consumption as the speech progresses. Aspirations, Economic development, Caring Society” – an ACE in the making – aimed towards a $ 5 tn economy by 2024-25 – if achieved with the right efforts, is in the right direction.”
Metals Sector: “3.6 lac crore approved for piped water to all households will be positive for pipe infrastructure companies such as Ratnamani Metals, Man Industries amongst others.”
Consumer Durables sector: “Electronics manufacturing industry – needs a boost – scheme focused on encouraging the manufacture of mobile phones, electronic equipment, and semiconductor manufacturing as well as medical devices bid positive for companies such as Dixon Technologies, Amber Enterprises, Subros.”
Infrastructure sector: “Need to focus on commercialization of highways – propose to monetize 12 blocks of highway bundles before 2024″ – positive for IRB Infra.”
Oil & Gas sector: “Propose to expand national gas grid from 16200 km to 27000 km ” …. positive for companies namely IGL, MGL, and Gujarat Gas.”
Pharma sector: “Plans to open more Jan Aushadhi stores to promote generic medicine. – No major positive with Jan Aushadhi schemes that we see as of now. As per our recent channel check, the majority of their stores are currently non-operational and facing inventory issues.”
Power sector: “While polluting thermal power plants may not be easily shut down, as envisaged in the speech, one can expect an increase in the focus towards installation and setup of FDG (Flue Gas Desulphurisation) for SoX and NoX, thereby reducing the emissions from thermal power plants. This will be positive for several companies namely Techno Electric, Thermax, BHEL and L&T some of whom have entered into technological tie-ups with global players for installation and EPC of FGDs.”
Mr. Dharmesh Kant, Head- Retail Research, IndiaNivesh
“Measures to boost revenue growth were the main challenge for the government in the face of slackening economic growth. While budget 2020-21 outlines the expenditure including higher spending on agriculture and rural development, it has a skipped plan layout for income generation. As a result, India is now facing a widened fiscal deficit at 3.8% for 2019-20 and 3.5% for 2020-21. The government also steered clear of doing away with long term capital gains tax (LTCG) and Securities Transaction Tax (STT) on equity which would have been helpful in aggressively mobilizing household savings towards capital markets. However, removal of the Dividend Distribution Tax is a welcome move.
Agri Chemical sector: We are negative on agri-chemical manufacturers and fertilizer manufacture after the finance minister announced that balanced use of fertilizer will bring about change in the prevailing regime of providing an incentive for use of chemical fertilizer.
While the government targets to double farm income by 2022, how this will be achieved is yet to be seen.
The budget proposed a 16-point action plan to boost agriculture and farmers’ welfare including providing transport for perishable goods movement and financing of warehousing receipts.
Infra Sector: Proposal to develop 5 new smart cities and development of infrastructure with specific emphasis on clean drinking water, infrastructure focussed skill development, warehousing and civil aviation is a big plus point. We are positive for NBCC & Sterlite technologies.
Aviation Sector: Further with a target of 100 new airports by 2024 we are positive on Indigo and Spice Jet.
The budget has something for everyone. However, the big question remains if the government has the fiscal space to meet these promises.”
Income Tax: The government has decided to streamline the complex personal tax regime and lowered income tax rates has provided a marginal relief to the taxpayers. However, we believe that rather than simplifying individual tax structure, it’s being made more complicated. Those earning more than 15 lakhs annually will be able to save about Rs 75,000 extra. However, without exemptions, it will come down to Rs 30,000 only.
Dividend Distribution Tax: Doing away with DDT is a good move, it will help bring in more investments and is a big positive for capital markets.
LTCG/STT: Markets were banking on the removal of LTCG and STT. However, no proposals made in this regard have disappointed markets. We expect the market to correct significantly.
- Whom 2020 budget is going to benefit and how: Old wine in New Bottle
- Industry Reactions on Budget 2020-21
Mr. Harit Shah, Sr. Analyst- Information technology, IndiaNivesh
“Government to come out with a policy to promote data center parks for development of big data technologies. The important aspect needs to be the focus on skills development in these technologies, given that IT firms face a shortage of digital talent.
Long term, the move could potentially benefit all IT firms including TCS, Infosys, Wipro, HCL Technologies, Tech Mahindra, along with mid-sized firms like LTI, Mindtree, Persistent, and Hexaware, among others, given the incremental focus on growing their digital businesses.”
Mr. Ravikant Bhat, Analyst – BFSI & Insurance, IndiaNivesh
“To achieve higher export credit disbursement – NIRVIK to be launched – high insurance cover, lower premium, simplification of claim settlement through the digital network” – currently premiums are up to 90% of the individual bill- this can be reduced further. Likely negative for general insurance companies such as ICICI Lombard and New India Assurance.
Multiple measures to provide support to MSMEs for a) facilitating invoice discounting via TReDs, b) making available subordinated-debt, and c) extension of debt restructuring window to Mar’21 to provide relief to stressed MSMEs. Current manufacturing MSME credit outstanding at Rs4.7tn or 5% of non-food credit.”
Mr. Akash Vashisth, Analyst- Chemicals, IndiaNivesh
“Focus on promoting traditional organic and other innovative fertilizer with a view to change incentive regime which promotes the use of chemical fertilizers. This comes in after the govt. stressed on zero budget farming in the previous budget. Negative for fertilizer companies as zero-budget farming significantly cuts down on agri-input consumption. However, the concept is still in the nascent stage as the lack of use of chemical inputs results in lower yield an production. The concept is being pioneered in AP and has received mixed reviews from farmers.”
Mr. Akash Vashisth, Analyst, IndiaNivesh
“Allocated 1480cr for National Technical Textiles Mission with 4yr implementation period. The mission will focus in support of domestic and export market development of technical textiles. The technical textiles industry is diversified with sub-categories like agro-textiles, clothing textiles, mobile-tech (textiles used in automotive), packaging textiles, sports textiles, etc , the largest segment being mobile-tech”. Aksh Vashishth, Analyst, IndiaNivesh
Miscellaneous sector views
Mr. Santosh Yellapu, Analyst, IndiaNivesh
“Rs. 6000cr allocation towards the BharatNet would benefit W&C companies like Sterlite Technologies, Polycab, Finolex Cables.Expansion/ Addition of solar capacities to the solar grid, Rail Electrification initiatives would indirectly benefit Wire & Cable companies like KEI, CMI, Polycab, Finolex Cables.”