Union Budget 2010-11 Sectoral Outcome
Following are the major sectors that are likely to gain or lose from the proposals of the budget:
WINNERS:
* Construction and engineering companies such as Larsen & Toubro, GMR Infrastructure, Jaiprakash Associates and Gammon Infra on proposal to invest 1.73 trillion rupees ($7.4 billion) on infrastructure in 2010/11.
The capital good index was up 1.8 percent by 0804 GMT, in line with the rise in the broader market.
* Real estate firms such as DLF, Unitech and Sobha Developers after the budget proposed to give developers tax deductions on existing projects and relaxed norms for built-up area. The sector index was up 4.8 percent.
* Drugmakers such as Dr Reddy's Laboratories, Cipla and Biocon after weighted deduction on in-house research and development expenses was proposed to be raised to 200 percent from 150 percent now.
* Hospitality services providers such as Indian Hotels, EIH and Taj GVK Hotels on proposal to allow firms setting up new two-star and above hotels to claim investment-linked tax deduction.
* State-run bank shares such as State Bank of India, Andhra Bank, Canara Bank and Bank of India on proposal to provide 165 billion rupees ($3.6 billion) for recapitalisation. The sector index was up 3.3 percent.
* Education service providers such as Educomp Solutions, NITT Ltd and Aptech after the budget increased allocation to the education sector to 1.38 trillion rupees in the union budget.
LOSERS:
* Outsourcers such as Infosys Technologies, Tata Consultancy Services and Wipro on no mention of extension of a tax holiday scheme for software firms in the budget speech. The tax break ends in March 2011. The sector index was flat in a firm market.
* Cigarette makers such as ITC Ltd after the budget proposed to raise excise duty on tobacco products. Shares in ITC was down 3.6 percent, after having fallen as much as 4 percent earlier.
Union Budget 2010-2011-Sector Wise-Expectations
Sector Wise Expectations:
Agriculture: Expected Impact;Positive
Fertiliser:-
Current policy does encourage corporates to undertake Gre-field expansion due to marginal/low returns.
Expected Change:New policy that allowes higher returns or gives capital subsidy on new Green-field capacity.
Impact:If the expected changes are met,it would help corporates expand capacity and in turn eliminate the country's dependance on imports.Positive for all fertiliser companies,especially TATA CHEMICALS,CHAMBAL FERTILISER,ZUARI IND,GNFC,GSFC AND RCF.
Irrigation System Subsidy:-
Expected Change:Increase allocation by 20-30%.
Impact:Will help in bringing more drought -prone areas under irrigation.Positive for companies like JAIN IRRIGATION that provides micro irrigation system solution to farmers.
Investment ideas:
Buy Beyer Corpscience at 586 tgt 713
Buy Jain Irrigation at 840 tgt 900
Buy K S Oils at 70 tgt 95
Automobile; Expected impact;Negative
Excice Duty:Commercial vehicles,small cars, Two Wheeler- current rate 8%- expected hike by 2 to 4%.Large cars and UVs-No change expected.
Investment ideas:
Buy M and M at 990 tgt 1200
Buy Tata Motors at 700 tgt 850
Buy TVS Motor at 60 tgt 85
Banking; Expected impact;Negative
Investment ideas:
Buy Axis Bank at 1100 tgt 1400
Buy Dena Bank at 75 tgt 100
Buy South Indian Bank at 140 tgt 200
Capital Goods; Expected impact;Positive
Import Duty on Power Genaraion equipment:
Current status : no import duty on foreign equipment for Mega Power projects
Expected change;Increase in import duty;
Impact;Will reduce the price differential between domestic and overseas players (especailly the chinees).Positive for BHEL, L&T and other new players planning to establish a domestic manufacturing base.
Fund Allocation:
Current status : Fund allocation for various programs including the APDRP and RGGVY.
Expected change;Expected to continue;
Impact;Positive for various transmission players (including Jyothi Structures,KEC International and Kalpataru Power), as it provides a continuing business opportunity.
Investment ideas:
Buy Crompton Greaves at 395 tgt 550
Buy Themax at 585 tgt 750
Buy Jyothi Structures at 160 tgt 210
Cement; Expected impact;Neutral
FMCG : Expected impact;Neutral
Hotels; Expected impact;Positive
Depreciation rate expected to be increased from 10% to 20%-Positive for all hotels.
Current status : Infrastructure status not granted now.
Expected change;Infrastructure status under Section 80IA of the Income Tax Act;
Impact;Will enable hotel players to get benefit of total deductions on profits and gains for 10 years.Positive for all hotels.
Investment ideas:
Buy Indian Hotel at 86 tgt 140
Buy TAJGVK at 145 tgt 220
Infrastructure; Expected impact;Positive
Current status : Current Infra spend of 4-5% of GDP is much below the requirement.
Expected change;taking Infra Spend t0 8-10% of GDP;
Impact;positive for all players.
Investment ideas:
Buy JP Associates at 130 tgt 200
Buy IVRCL at 310 tgt 450
Buy LT at 1490 tgt 1900
Media; Expected impact;Positive
Buy Jagran Prakash at 118 tgt 150
Buy Zee News at 56 tgt 70
METALS : Expected impact;Neutral
Buy Sterlite at 746 tgt 950
Buy Tata Steel at 572 tgt 700
Buy Hindustan zinc at 1080 tgt 1400
Oil & Gas : Expected impact;Neutral
Buy Shiv-Vani Oil at 360 tgt 440
Buy GSPL at 87 tgt 120
Buy RIL at 970 tgt 1400
Power; Expected impact;Positive
Expected ;Extension of deduction under Section 80IA beyond FY 2011 and exemption of duty on import of Power equipment.
Buy PTC at 106 tgt 140
Buy Adani Power at 106 tgt 140
Real Estate : Expected impact;Neutral
Buy Anant Raj Industries at 125 tgt 200
Software; Expected impact;Positive
Expected Benefits:Tax exemption available under 10A/10B for exports to be extened for 5 more years.Incremental allocation under schemes like APDRP,UIDAI and Defence.Incremental allocation in educational sector.
Buy Educomp Solutions at 720 tgt 1000
Buy Everonn at 410 tgt 550
Buy Infosys at 2565 tgt 3000
Buy TCS at 755 tgt 900
Retail; Expected impact;Neutral
Expected Benefits;Introduction of GST in a speedy and efficient manner.Will benefit all retailers
Buy Shoppers shop at 329 tgt 400
Following are the major sectors that are likely to gain or lose from the proposals of the budget:
WINNERS:
* Construction and engineering companies such as Larsen & Toubro, GMR Infrastructure, Jaiprakash Associates and Gammon Infra on proposal to invest 1.73 trillion rupees ($7.4 billion) on infrastructure in 2010/11.
The capital good index was up 1.8 percent by 0804 GMT, in line with the rise in the broader market.
* Real estate firms such as DLF, Unitech and Sobha Developers after the budget proposed to give developers tax deductions on existing projects and relaxed norms for built-up area. The sector index was up 4.8 percent.
* Drugmakers such as Dr Reddy's Laboratories, Cipla and Biocon after weighted deduction on in-house research and development expenses was proposed to be raised to 200 percent from 150 percent now.
* Hospitality services providers such as Indian Hotels, EIH and Taj GVK Hotels on proposal to allow firms setting up new two-star and above hotels to claim investment-linked tax deduction.
* State-run bank shares such as State Bank of India, Andhra Bank, Canara Bank and Bank of India on proposal to provide 165 billion rupees ($3.6 billion) for recapitalisation. The sector index was up 3.3 percent.
* Education service providers such as Educomp Solutions, NITT Ltd and Aptech after the budget increased allocation to the education sector to 1.38 trillion rupees in the union budget.
LOSERS:
* Outsourcers such as Infosys Technologies, Tata Consultancy Services and Wipro on no mention of extension of a tax holiday scheme for software firms in the budget speech. The tax break ends in March 2011. The sector index was flat in a firm market.
* Cigarette makers such as ITC Ltd after the budget proposed to raise excise duty on tobacco products. Shares in ITC was down 3.6 percent, after having fallen as much as 4 percent earlier.
Union Budget 2010-2011-Sector Wise-Expectations
Sector Wise Expectations:
Agriculture: Expected Impact;Positive
Fertiliser:-
Current policy does encourage corporates to undertake Gre-field expansion due to marginal/low returns.
Expected Change:New policy that allowes higher returns or gives capital subsidy on new Green-field capacity.
Impact:If the expected changes are met,it would help corporates expand capacity and in turn eliminate the country's dependance on imports.Positive for all fertiliser companies,especially TATA CHEMICALS,CHAMBAL FERTILISER,ZUARI IND,GNFC,GSFC AND RCF.
Irrigation System Subsidy:-
Expected Change:Increase allocation by 20-30%.
Impact:Will help in bringing more drought -prone areas under irrigation.Positive for companies like JAIN IRRIGATION that provides micro irrigation system solution to farmers.
Investment ideas:
Buy Beyer Corpscience at 586 tgt 713
Buy Jain Irrigation at 840 tgt 900
Buy K S Oils at 70 tgt 95
Automobile; Expected impact;Negative
Excice Duty:Commercial vehicles,small cars, Two Wheeler- current rate 8%- expected hike by 2 to 4%.Large cars and UVs-No change expected.
Investment ideas:
Buy M and M at 990 tgt 1200
Buy Tata Motors at 700 tgt 850
Buy TVS Motor at 60 tgt 85
Banking; Expected impact;Negative
Investment ideas:
Buy Axis Bank at 1100 tgt 1400
Buy Dena Bank at 75 tgt 100
Buy South Indian Bank at 140 tgt 200
Capital Goods; Expected impact;Positive
Import Duty on Power Genaraion equipment:
Current status : no import duty on foreign equipment for Mega Power projects
Expected change;Increase in import duty;
Impact;Will reduce the price differential between domestic and overseas players (especailly the chinees).Positive for BHEL, L&T and other new players planning to establish a domestic manufacturing base.
Fund Allocation:
Current status : Fund allocation for various programs including the APDRP and RGGVY.
Expected change;Expected to continue;
Impact;Positive for various transmission players (including Jyothi Structures,KEC International and Kalpataru Power), as it provides a continuing business opportunity.
Investment ideas:
Buy Crompton Greaves at 395 tgt 550
Buy Themax at 585 tgt 750
Buy Jyothi Structures at 160 tgt 210
Cement; Expected impact;Neutral
FMCG : Expected impact;Neutral
Hotels; Expected impact;Positive
Depreciation rate expected to be increased from 10% to 20%-Positive for all hotels.
Current status : Infrastructure status not granted now.
Expected change;Infrastructure status under Section 80IA of the Income Tax Act;
Impact;Will enable hotel players to get benefit of total deductions on profits and gains for 10 years.Positive for all hotels.
Investment ideas:
Buy Indian Hotel at 86 tgt 140
Buy TAJGVK at 145 tgt 220
Infrastructure; Expected impact;Positive
Current status : Current Infra spend of 4-5% of GDP is much below the requirement.
Expected change;taking Infra Spend t0 8-10% of GDP;
Impact;positive for all players.
Investment ideas:
Buy JP Associates at 130 tgt 200
Buy IVRCL at 310 tgt 450
Buy LT at 1490 tgt 1900
Media; Expected impact;Positive
Buy Jagran Prakash at 118 tgt 150
Buy Zee News at 56 tgt 70
METALS : Expected impact;Neutral
Buy Sterlite at 746 tgt 950
Buy Tata Steel at 572 tgt 700
Buy Hindustan zinc at 1080 tgt 1400
Oil & Gas : Expected impact;Neutral
Buy Shiv-Vani Oil at 360 tgt 440
Buy GSPL at 87 tgt 120
Buy RIL at 970 tgt 1400
Power; Expected impact;Positive
Expected ;Extension of deduction under Section 80IA beyond FY 2011 and exemption of duty on import of Power equipment.
Buy PTC at 106 tgt 140
Buy Adani Power at 106 tgt 140
Real Estate : Expected impact;Neutral
Buy Anant Raj Industries at 125 tgt 200
Software; Expected impact;Positive
Expected Benefits:Tax exemption available under 10A/10B for exports to be extened for 5 more years.Incremental allocation under schemes like APDRP,UIDAI and Defence.Incremental allocation in educational sector.
Buy Educomp Solutions at 720 tgt 1000
Buy Everonn at 410 tgt 550
Buy Infosys at 2565 tgt 3000
Buy TCS at 755 tgt 900
Retail; Expected impact;Neutral
Expected Benefits;Introduction of GST in a speedy and efficient manner.Will benefit all retailers
Buy Shoppers shop at 329 tgt 400
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