Budget 2024: Negative for IRCON, RVNL and RITES; positive for IREDA, BEL & others

Antique Stock Broking in its latest note called the interim Budget 2024 credible, saying it focused on fiscal consolidation and capital spending, while staying clear of populism despite the upcoming union election. The foreign brokerage said the budget has been non-inflationary in nature as FY25 fiscal deficit at 5.1 per cent of GDP and net borrowing remaining unchanged will help support bond yields.

The Budget proposed 11 per cent YoY growth in capex spending but lacked measures to revive rural consumption, given 3 per cent YoY growth for the rural ministry.

In the building materials segment, Antique noted that PM Awas Yojana Gramin, an affordable housing scheme, was nearing target of delivering three crore houses and that the government aimed to further deliver two crore houses over the next five years and budgeted outlay of Rs 80,700 crore, up 49 per cent YoY, for FY25. Tiles and pipe players such as Kajaria, Somany Ceramics Ltd, Apollo Pipes, Prince Pipes and Fittings Ltd, Finolex Industries Ltd, Supreme Industries Ltd, and Astral Ltd are likely to be key beneficiaries of the same, the brokerage said.

Jal Jeevan Mission, a scheme to provide tap water, had budget outlay of Rs 70,200 crore, flat YoY for FY25. Atal Mission for Rejuvenation and Urban Transformation (AMRUT) aimed at providing universal coverage of water supply through functional taps to all households and coverage of sewerage/septage management in 500 cities, had a budget outlay of Rs 8,000 crore, up 54 per cent. Pipe players such as Apollo Pipes, Prince, Finolex, Supreme, and Astral are seen benefitting from the same.

"With government focus to provide impetus to capex activity, business prospects for industrial and engineering companies are expected to gain traction and should augur well for companies like Larsen & Toubro Ltd, Siemens Ltd, Bharat Electronics Ltd, Bharat Dynamics Ltd," Antique Stock Broking said.

The brokerage said defence capex at Rs 1.7 lakh crore was up 9 per cent over FY24 RE and the catalyst would be Make in India projects. Hindustan Aeronautics Ltd, Bharat Electronics Ltd and Bharat Dynamics could be beneficiaries.

The road ministry capex allocation increased 3 per cent YoY while for power ministry it increased 14 per cent. "Marginally positive for all engineering and industrial companies that are reliant on these sectors for ordering. Siemens, L&T, Hitachi Energy, BHEL, KEC," it said.

Namami Gange Project and the proposed amount in “Nal se jal” should be positive for EPC players like NCC.

For railways, the budgetary support at Rs 2.5 lakh crore, up 5 per cent YoY was negative for IRCON International Ltd, RVNL, and RITES Ltd, as Antique was expecting a higher outlay.

Allocation to metro at Rs 35,300 crore was negative for EPC players like Dilip Buildcon, ITD Cementation India, J Kumar Infraprojects Ltd and NCC.

High-speed rail capital outlay at Rs 25,000 crore, up 35 per cent YoY, was seen 'Neutral' for Larsen & Toubro Ltd and IRCON International Ltd.

A flat Naval expenditure was seen neutral for Mazagon Dock Shipbuilders Ltd, Garden Reach Shipbuilders and Engineers Ltd (GRSE) and Cochin Shipyard Ltd. Support to IREDA at Rs 25900 crore was positive, Antique said.

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