Budget 2009 – Sectoral Views

We have covered some immediate views about the Budget here – Part-1, and Part-2.

We are now analyzing the impact of Budget-09 on each and every Individual Sector of the Indian Economy.

Overall Expected Budget Impact: Positive
Reduction in Cenvat to be applicable for Commercial vehicles (trucks, light vehicles) can be retained to absorb increase in raw material prices – Positive for Tata Motors and Ashok Leyland.

Reduction in Excise duty for small cars, two and three wheelers, buses and bus body chassis to be largely passed on, but could result in higher demand – Positive for Maruti, Bajaj Auto, TVS Motors and Hero Honda in that order

Banking Sector:
Overall Expected Budget Impact: Neutral.

Neutral / Positive: ICICI Bank, HDFC Ltd (due to abolition of DDT on holding co structures) Govt banks if govt bears loan waiver hit.

Overall Budget Impact: Negative
Excise duty on bulk cement revised to 14% ad-valorem or Rs400/ton, whichever is higher. Earlier, bulk cement attracted a flat duty of Rs400/ton. Excise duty on clinker hiked to Rs450/ton versus Rs350/ton earlier.

Consumer Sector:
Overall Expected Budget Impact: Neutral
Excise on non filter cigarettes has increased 142% in the Plains category and 392% in the Micros category. Excise Duty on prepared foods obtained by swelling or roasting of cereals reduced from 16% to 8%.

Other consumer products – Reduction in excise duty from 16% to 14%.

Infrastructure sector:
Overall Expected Budget Impact: Positive
Stocks: BHEL, L&T, ABB, JPA, IVRC, NJCC, GMR Infra
Withdrawal of 4% additional customs duty exemption on non-mega power generation, transmission & distribution equipments. This would increase the protection to domestic power equipment producers such as BHEL v/s Chinese competition in non-mega (300 & 600MW sets) segment.

Offshore IT and BPO services:
Overall Expected Budget Impact: Positive for education; Higher offset business opportunity arising from increased defense spend; Neutral for generic IT services.
Stocks Affected: Educomp, Rolta, Infotech

Overall Expected Budget Impact: Positive
Reduction in excise duty on all pharmaceuticals from 16 per cent to 8 per cent as well as total exemption from excise duty for the anti AIDS drug, Atazanavir.

Increase in budget allocation for polio elimination program (Rs10.42bn) and for AIDS control program (Rs9.93bn) which could be positive for companies like Panacea, Matrix, Ranbaxy, Cipla. Further allocation for the health sector has been increased by 15% to Rs165.3bn.

Grant of five year tax holiday to encourage hospitals to be set up anywhere in India, except certain notified areas in tier-2 and tier-3 towns (for period April 1, 2008 to March 31, 2013)

No Major Impact on Real Estate, Media, Metals and Minings and Oil-Gas Petroleum.