Finance Minister Nirmala Sitharaman is likely to give infrastructure development a lift in her Budget 2023, with special focus roads and construction. This in turn could lift infrastructure and building-materials stocks. Analysts said real estate is a key sector that needs a further push. Increasing the outlay of existing PLI Schemes is likely, they said. A much-needed support to rural economy may result in higher incomes and improved consumption, which should aid sectors like automobile, cement and consumers. The government can also announce incremental incentives for EV infrastructure, analysts said.
Below is the compilation of broader sectoral expectations from the Budget and stocks that could benefit from the likely Budget announcements.
1) PLI support for manufacturing of components for batteries. At present, PLI support is available for investments in advanced chemistry cell (ACC) manufacturing.
Likely key beneficiaries: ACC, Exide Industries, Amara Raja Batteries
2) Reduction in applicable GST rate on EV components to 5 per cent from an average of 18 per cent. So far, GST rate is 5 per cent for EVs and 18 per cent on an average for EV components.
Likely beneficiaries: Greaves Cotton, TVS Motor, Gabriel industries, Bosch, Tata Motors
3) Reduction in cess on hybrid vehicles. At present, hybrid vehicles are attracting GST rate at 43 per cent, including cess.
Likely beneficiary: Maruti Suzuki
4) Increase in growth-oriented capex. So far, an amount of Rs 7,50,000 crore has earmarked for growth-oriented capex in FY23 Budget.
Likely beneficiary: Ashok Leyland, Tata Motors
5) New schemes to promote investment in rural areas.
Likely beneficiaries: Hero MotoCorp, M&M & Escorts
6) Issue of composite insurance license through which insurers can sell both life and non-life insurance products without separate license). This will enhance the scope by easy entry for more players in insurance market and improving overall efficiencies of the insurance industry. Post issue of composite license there will be change in solvency margin and capital requirement of insurers.
Likely beneficiaries: LIC of India, HDFC Life, SBI Life
7) Increased allocation for metro projects and visibility on flagship projects like Delhi–Varanasi high-speed rail corridor (second bullet train project).
Likely beneficiaries: EPC players L&T, JKumar, KEC International, RVNL, Kalpataru), Coaches manufacturer BEML and Systems suppliers Siemens, Hitachi Energy.
8) Increase in defence capex allocation from Rs 1.5 lakh crore in FY23, with focus on indigenisation and exports.
Likely beneficiaries: HAL, Bharat Dynamics, BEL, L&T, Bharat Forge
9) Removal of import duty of 11 per cent on cotton and cotton waste import. Higher raw cotton prices have led to elevated cotton yarn prices negatively impacting the global competitiveness of Indian textile players across the textile value chain. Reduction and/or removal of import duty may help textile companies to import cheaper cotton into the country and aid in stabilising yarn prices.
Likely beneficiaries: Vardhman Textiles, KPR Mills, Gokaldas Exports
10) Increased basic customs duty on import of man-made yarn from 5 per cent to 10 per cent. Increasing of customs duty on MMF Yarn would reduce imports of MMF based yarn and be positive for Indian MMF yarn companies as they would be able to witness better utilisation of existing capacities.
Likely beneficiaries: Filatex, Indo Rama Synthetics
11) Reduction in import duty of gold from current 15 per cent. A cut in duties could provide a temporary breather t o spiralling prices. Also, reduction in custom duties could curb higher gold smuggling.
Likely beneficiaries: Titan Company, Kalyan Jewellers
12) Announcement of concessional infrastructure to support Central Bank Digital Currency (CBDC).
Likely beneficiaries: State Bank of India, Bank of Baroda, HDFC Bank and Kotak Mahindra Bank
13) Increase in capital outlay for railways by 15 per cent. The funds will be utilised for laying of new lines (at least 2,000 km), gauge conversion, electrification and signaling, apart from improvement in rolling stock.
Likely beneficiaries: L&T, KEC International, Kalpataru Power Transmission
14) Higher allocation for reform-linked distribution scheme and strengthening of power systems
Likely beneficiaries: PGCIL, Siemens, Hitachi Energy, Voltamp Transformer, GE Power, CG Power, ABB, Schneider Electric Infra
15) Launch of schemes to develop eco system for green hydrogen technology & manufacturing
Likely beneficiaries: L&T, Cummins, Siemens, MTAR Technologies
16) Increased allocation for Jal Jeevan Mission/National Rural Drinking Water Programme
Likely beneficiaries: L&T, JMC Projects, KSB, Thermax, VA Tech Wabag
17) PLI schemes could be extended to the robotics sector, as this will encourage global players to Make-in-India
Likely beneficiary: ABB
18) Announcements about rationalisation of GST structure on cement.
Likely beneficiaries: UltraTech Cement, sector at large
19) Shifting the tax liability on buyback of shares from companies to individual shareholders who participated in the share repurchase process.
Likely beneficiaries: TCS, Infosys, Wipro, HCL Tech
20) Impetus to the ports sector and port connectivity under PM Gati Shakti
Likely beneficiary: Adani Ports
21) Increase the PLI outlay for sectors such as IT hardware and also introduction of PLI for toys to further promote Aatmanirbhar Bharat.
Likely beneficiaries: Dixon, Syrma, Kaynes and other plastic moulding and toy manufacturers
22) Clarity and higher investments in housing for all initiative and increase in budgets for Smart Cities post relaxation in built up area and FDI requirements.
Likely beneficiaries: Asian Paints, Berger Paints and for Pidilite Industries
23) PLI could be provided to incentivise the manufacturing of electrolysers for producing green hydrogen, given the green energy push
Likely beneficiaries: RIL, NTPC, L&T
24) Clarity on the planned privatisation of two PSBs.In Budget 2022, the government announced privatisation of two PSBs other than IDBI Bank.
Likely beneficiaries: Central Bank of India, Indian Overseas Bank
25) Budgetary announcements regarding capital allocation for 300-400 new Vande Bharat trains
Likely beneficiaries: Siemens India, KEC International, BHEL, Titagarh Wagons
26) Budgetary support or incentives for inland waterways, shipping and shipbuilding to increase global trade and modernize domestic shipbuilding sector.
Likely beneficiaries: Cochin Shipyard, Container Corporation of India (CONCOR), Garden Reach Shipbuilders & Engineers Ltd (GRSE) and MDL (non-defence business)
27) Increase in fertiliser subsidy to Rs 2,25,000 crore from Rs 105,222 crore in FY23.
Likely beneficiaries: Gujarat Narmada Valley Fertilizers & Chemicals Limited, Rashtriya Chemical and Fertilizers,
National Fertilisers, Madras Fertilisers, Chambal Fertilisers and Deepak Fertilisers
28) Hotels with capital expenditure above Rs 25 lakh should be granted infrastructure status; registration fees of 1 per cent of the overall lease amount payable annually from the existing 10 per cent and one-time relaxation of any penalty or arrears to the hotels or restaurants whose lease agreement is unregistered till date.
Likely beneficiaries: Indian Hotels Company, Chalet Hotels, Lemon Tree Hotels, Jubilant FoodWorks and Speciality Restaurants
29) Increase allocation under the MNREGA scheme. Total allocation under MNREGA was Rs 73,000 crore in Union Budget 2022.
Likely beneficiaries: Hindustan Unilever, Dabur India, Emami and Jyothy Labs.
30) Deduction limit under section 80C for principal repayment of housing loan to be increased to Rs 4 lakh from Rs 1.5 lakh.
Likely beneficiaries: DLF, Macrotech, Oberoi Realty, Prestige Estates, Puravankara, Sobha
31) Increase in price cap of affordable housing (having carpet area of 60 sq mt or below) in metro cities to Rs 75 lakh from Rs 45 lakh.
Likely beneficiaries: DLF, Macrotech, Oberoi Realty, Prestige Estates, Puravankara, Sobha
32) Capping of GST rates at 1 per cent for under-construction properties. GST for under construction non-affordable properties is 12 per cent with ITC and 5 per cent without ITC. For under-construction affordable properties, GST is 8 per cent with ITC and 1 per cent without ITC.
Likely beneficiaries: DLF, Macrotech, Oberoi Realty, Prestige Estates, Puravankara, Sobha
33) Reduction of capital gains tax to 10 per cent from 20 per cent and holding period to one year from two year. The cap of Rs 2 crore to increase to Rs 5 crore for exemption of capital gains tax on investment in two properties.
Likely beneficiaries: DLF, Macrotech, Oberoi Realty, Prestige Estates, Puravankara, Sobha
34) Same status be assigned to Nutraceuticals as given to Pharma sector in terms of its GST slab.
Likely beneficiaries: Dr Reddy’s, Torrent Pharma, and Cipla.
35) Exemption of import duty on LNG against import duty of LNG at 2.5 per cent.
Likely beneficiaries: GAIL, GSPL, IGL, MGL, Gujarat Gas and Petronet LNG
36) Removal of service tax on royalty on oil & gas.
Likely beneficiaries: ONGC, Oil India and Vedanta
37)Increase subsidy on LPG and also provide subsidy provision on auto fuel.
Likely beneficiaries: IOCL, BPCL and HPCL
38) Exemption of exploration activity from levy of GST. At present, GST of 12 per cent on offshore contract services for oil & gas exploration is levied.
39) Reduce custom duty on steel mill rolls; inclusion of steel in RoDTEP; increase allocation for PLI scheme for specialty steel sector from Rs 6,322 crore.
Likely beneficiaries: JSW Steel, Tata Steel, JSPL and downstream players like APL Apollo Tubes
40) Increase in budgetary support to Ministry of road transport and highways from Rs 1.99 lakh crore in FY2023 to Rs 2.1-2.5 lakh crore for FY2024.
Likely beneficiaries: KNR Constructions, PNC Infratech, JMC Projects, Ashoka Buildcon
Also read: Budget 2023: 5 things that stock investors are looking for