The Union Budget 2024 allocated Rs 14.8 lakh crore to the infra space, up 16 per cent compared with Rs 12.8 lakh crore in FY24 (RE). This was also marginally higher than the Rs 14.5 lakh crore capex outlay outlined in the Interim Budget 2024. The gross budgetary support (GBS) rose 17 per cent to Rs 11 lakh crore, the same as Interim Budget. Outlays for the railway and road sectors are up just 2 per cent and 3 per cent, respectively, compared with FY24 (RE).
"The Union Budget for FY25 was pretty similar to the Interim Budget; apart from higher outlay for PMAY (Urban) and target to procure more rolling stock in railways, there were no major changes. Total capex is up 16 per cent over FY24 revised estimate (RE), but down 1 per cent compared with FY24 budgeted estimate (BE). Various programmes were announced to accelerate infra development in Andhra Pradesh and Bihar," Nuvama Institutional Equities said.
It noted that Indian Railways has sharpened its focus on rolling stock procurement with higher targets for FY25E now versus the Interim Budget for wagons (38,000 now compared with 26,000 earlier), electric locomotives (1,600 against 1,200) and coaches (8,405 against 7,748 earlier).
"The tepid growth in capex outlay is disappointing for companies in the roads and water segments; on the other hand, continued focus on rail capex shall aid companies such as Titagarh and Texmaco Rail. A pickup in capex in Andhra Pradesh would benefit NCC, in our view," it said.
By providing higher budgetary support, Nuvama said the government is walking the talk by targeting the funding issue that has been the Achilles heel for the infra space in India.
By curtailing IEBR, it should also reduce concerns about the debt burden of agencies such as NHAI, Nuvama said adding that a rise in capex for affordable housing is positive but a muted rise in capex for roads, railways, water, and urban infra is a clear negative.
"The affordable housing segment witnessed a 56 per cent YoY uptick in outlay; within this, the outlay for PMAY-Rural was up 70 per cent YoY while that of PMAY-Urban was up 37 per cent. Projected capex for PMAY-Urban was 15 per cent higher than that in the Interim Budget. Meanwhile, the outlay for Smart Cities is down 70 per cent YoY, but up 54 per cent YoY for the AMRUT scheme," it said.
The metro rail segment clocked an 8 per cent YoY increase in outlay for FY25. The government announced a slew of programmes for infra development in Bihar (expressways, power, economic corridors, flood prevention) and Andhra Pradesh (Amaravati Capital city, economic corridors, irrigation projects, support to backward regions in the states).
Within railways, focus clearly is on rolling stock procurement, which is positive for Titagarh Rail, Texmaco Rail and BEML, rather than network expansion. Higher capex in Andhra Pradesh should benefit players such as NCC and KNR Constructions.