Union Budget: Infrastructure, Realty & Finance sectors emerge biggest winners

Zee Research Group

In a challenging economic environment, Arun Jaitley has presented the Union Budget 2014-15 which mainly targets to maintain fiscal prudence. Further, the budget has laid down various measures which can improve the economic outlook of the country.

Zee Research Group (ZRG) has listed various companies which are the likely beneficiaries of the budgetary announcements.

1. FDI cap in defence hiked to 49 percent: Increase in FDI limit would play a crucial role in ramping up defense production in India.

Beneficiaries: L&T, BEML, BEL, Astra Microwave

2. FDI cap in insurance sector hiked to 49 percent: The composite cap in the Insurance sector is proposed to be increased up to 49 percent with full Indian management and control, through the FIPB route. The move would cater to the capital requirements of the sector.

Beneficiaries: Max India, Reliance Capital

3. Allocation for defence sector enhanced: The government has allocated an amount of Rs 2.29 lakh crore for the current financial year.

Beneficiaries: BEL, BEML, Pipavav Defence

4. PSU banks recapitalization: While preserving the public ownership, retail share sales for PSU banks would be done in a phased manner.

Beneficiaries: Positive for all PSU Banks (SBI, BOB)

5. Support to infra lending: The banks will be permitted to raise long term funds for lending to infrastructure sector with minimum regulatory preemption such as CRR, SLR and Priority Sector Lending (PSL).

Beneficiary: IDFC

6. Boost for realty sector: To encourage development of smart cities, requirement of the built up area and capital conditions for FDI has being reduced from 50,000 sqmt to 20,000 sqmt and from USD 10 million to USD 5 million respectively, with a three-year post completion of lock-in.

Beneficiary: Positive for the entire realty sector

7. Allocated Rs 1000 crore for irrigation scheme: The government has proposed to initiate the scheme “Pradhan Mantri Krishi Sinchayee Yojana”. Further, it has set aside a sum of Rs 1,000 crore for this purpose.

Beneficiary: Jain Irrigation

8. Setting up 3P India: An institution to provide support to mainstreaming PPPs called 3P India would be set up with a corpus of Rs 500 crores.

Beneficiaries: Positive for PPP players such as L&T, IRB Infra etc.

9. New ship building policy on the anvil: A comprehensive policy will be announced to promote Indian ship building industry in the current financial year.

Beneficiaries: Positive for the ship building sector (Pipavav Defence, Bharati Shipyard, ABG Shipyard)

10. Ten-year tax holiday provided to power companies: The budget has extended the 10 year tax holiday to the undertakings which begin generation, distribution and transmission of power by March 31, 2017.

Beneficiaries: Positive for power sector

11. Thrust on smart cities: The government has provided a sum of Rs 7060 crore in the current fiscal for the critical activity.

Beneficiary: Positive for the cement sector

12. Focus on Affordable Housing: The budget has allocated Rs 4,000 crores for NHB with a view to increase the flow of cheaper credit for affordable housing to the urban poor segment.

Beneficiaries: Unitech, HDIL, Puravankara Projects

13. Tax incentives for REITS: The budgetary announcement has provided necessary incentives for REITS which will have pass through for the purpose of taxation.

Beneficiaries: DLF, Prestige Estates

14. Development of Ports: Sixteen new port projects are proposed to be awarded this year with a focus on port connectivity.

Beneficiaries: Adani Ports & SEZ, Gujarat Pipavav Port

15. Allocation for road building plan via NHAI: The budget has proposed investment in National Highway Authority (NHAI) and State Roads of an amount of Rs 37,880 crores, which includes Rs 3,000 crores for the North East. During the current fiscal, a target of national highway construction of 8500 km is set.

Beneficiaries: Positive for road developers (IRB Infra, Sadbhav Engineering, ITNL)

16. Inclusion of slum development in the list of Corporate Social Responsibility (CSR) activities: The move would encourage private sector to contribute more towards this activity.

Beneficiaries: HDIL, DB Realty

17. Revival of SEZs: The Government has shown their commitment to revive the Special Economic Zones (SEZs).

Beneficiaries: Jai Corp, Adani Ports & SEZ

18. Boost to manufacturing sector: The move of bringing down the limit of Rs 100 crore to Rs 25 crore of investment on machinery for the eligibility of 15 percent investment allowance to manufacturing sector is a very positive step. It will encourage the manufacturers to invest more in machinery which can push the overall growth in this sector.

Beneficiaries: Positive for Capital Goods companies

19. Allocation for safe drinking water: The budget has proposed to earmark Rs 3,600 crore under National Rural Drinking Water Programme for providing safe drinking water.

Beneficiaries: VA Tech Wabag, Thermax

20. e-Visa at airports: The facility of Electronic Travel Authorization (e-Visa) would be introduced in a phased manner at nine airports in India where necessary infrastructure would be put in place within the next six months.

Beneficiaries: Cox & Kings, Thomas Cook

21. Provided tax relief to the middle class through raising basic exemption limit: The government has raised tax exemption limit to Rs 2.5 lakhs: This move would put more money in hands of consumers.

Beneficiary: Positive for the entire FMCG sector

22. Custom duty on Palm oil Fatty Distillate reduced from 7.5 percent to 0 percent: The move would reduce the input cost for the soap manufacturers.

Beneficiaries: HUL, and GCPL

23. Excise duty on cigarettes increased in the range of 11 percent to 72 percent: The hike in excise duty on cigarettes would increase the prices of cigarettes.

Impact: Negative for companies like ITC, Godfrey Phillips, VST Industries