1-CONSUMER Sector (FMCG)
Higher than expected excise duty on
cigarettes
Defensive stocks continue to remain
expensive
2-METALS
Upward revision in royalty rates – not a
surprise, was already due
Levy of import duty on coking coal, met
coke to marginally impact companies
Increase in export duty on Bauxite from
10% to 20%, positive for aluminium
manufacturers without captive bauxite
Intent to resolve iron ore mining issues
quickly – positive for steel producers
3-HEALTHCARE
Not much announced in the budget
The government is focusing on
healthcare, regulatory and research
infrastructure, rural penetration and
health for all
Positive for domestic growth over the
medium to long term
US opportunity remains very positive
along with revival in domestic
formulations
US patent cliff to benefit pharma
companies and domestic formulations
could also do well going forward
4-AUTOS
The increase in Sec 80CC benefit and
hike in IT slabs may lead to more
disposable income (marginally positive
for two wheelers and entry segment cars)
Excise duty benefit had already been
extended till Dec’14 before the budget
We remain positive on passenger vehicles
and medium and heavy commercial
vehicles (M&HCVs)
Resolution of mining issues should
increase demand for M&HCVs
Recovery in economic growth would lead
to a revival in demand (already visible in
June auto numbers)
5-OIL & GAS
We expect major policy announcements
for the sector to come in the next few
quarters
Decision awaited on gas pricing
framework and actual roadmap on
reducing oil subsidies further
Broad guidelines discussed in the budget
are positive, in our view – the need to
overhaul the fuel subsidy regime
including targeted subsidies, emphasis
on raising natural gas penetration,
harnessing unconventional gas
production and reviving production from
mature/shut E&P wells
6-FERTILIZER
New urea policy to be announced.
However, the timelines are not clear.
We expect the higher budgetary support
to trickle down to the small and marginal
farmers; improving their ability to afford
high yielding variety seeds, fertilizers,
crop protection chemicals and irrigation
equipments
7-FINANCIALS
PSU bank re-capitalization would be
positive. More clarity awaited. Banks will
need roughly Rs 2,40,000 crore
(US$40bn) by 2018 to meet Basel-III
requirements
Infra lending: Banks will be permitted to
raise long term funds for lending to the
infrastructure sector with minimum
regulatory pre-emption
FDI in insurance increased from 26% to
49%
Debt recovery tribunals (DRT): Six new
debt recovery tribunals to be set up. This
is a positive and will speed up recovery of
bad loans
Housing Loans: Increased interest
deduction on housing loans to Rs200,000
from Rs150,000. Positive: will reduce
interest burden on the consumer. To
illustrate this, for a Rs2mn loan the
effective interest cost (after tax savings)
would decline from 6% to 5.2%
8-TELECOM
10% customs duty on high end telecom
equipment is a negative for telcos
9-INFORMATION TECHNOLOGY
No specific announcements in the
budget
The sector may continue to benefit from a
global recovery and increased
discretionary spend in the US/Europe
Stronger rupee could pose a risk to
margins in the medium term
10-CAP GOODS AND
INFRASTRUCTURE/
REAL ESTATE
Focus on roads (8500 KM in FY 2015) and
allocation of Rs. 37,500 cr. (27000 cr. last
year)
Power: 10 year tax holiday extended till
March 2017
Defense: Capital outlay for defense
increased by 20% to Rs. 95,000 cr.
FDI in defense raised to 49% with Indian
management control
Development of airports in tier 1 and 2
cities via PPP route
Business Trusts to benefit the sector as
companies could monetize income
generating assets
Real Estate: REIT will be positive for the
construction/Real estate sector
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