Markets- Budget: Jefferies India Pvt Ltd expects budget to bring a positive for several domestic sectors such as affordable housing, capex plays, consumer, rate-sensitives etc. On the other hand expects Information Technology & Pharma to lack triggers.
In the strategy note on Budget, Mahesh Nandurkar, Abhinav Sinha , Nishant Poddar of Jefferies said that Budgets are usually a tightrope walk for the Government as it needs to balance fiscal with capex & growth. However this time there is ample cushion and the government can please everyone with higher capex, social spending and yet a tighter fiscal.
The government has received around Rs1.5 trillion in fiscal support since the interim budget presentation on February 1st, primarily due to the extra RBI dividend of Rs1.2 trillion.
Secondly, the actual fiscal deficit for FY24 was 25 bps lower than estimated in the February'24 budget. The buoyancy from income tax adds almost ₹300 billion to the cushion. The government will have about 40–50bps of fiscal headroom overall. (100 bps or basis points make 1%).
1.Significant income tax relief expected- The government may be able to provide a significant income tax relief which could be aimed at the middle class having income range of ₹10 Lakh to ₹15 Lakh.
This could accrue positives for discretionary consumer demand, benefitting Jubilant FoodWorks , Devyani International, Bharti Airtel in the telecom-sector, e-commerce companies as Zomato, Nykaa ( FSN E-Commerce Ventures ), Honasa Consumer and Retail chains- Trent, Reliance Retail (Reliance Industries). Additionally, it is also positive for passenger Vehicles manufacturers as Maruti Suzuki India and Consumer Durables manufacturers as V-Guard Industries, Crompton Greaves Consumers and, Havells.
2.Government may bring back the Interest subsidy (CLSS) scheme for Urban housing. The same is positive for some developers as Lodha (Macrotech Developers Ltd), Sunteck realty and affordable housing lenders like AAVAS Financiers, Home First Finance Company India as per Jefferies.
3. A boost of about ₹0.3 Trillion or 20% YoY growth in the capex budget would reassure contractors, capital-good companies. It will be positive for Larsen and Toubro.
4. The 'welfare' (non-capex) costs might potentially increase by approximately Rs0.5 trillion. One may expect the government's health insurance scheme to include all Senior citizen. Further a significant improvements in rural infrastructure and welfare could have an sentimental benefit for rural plays like Hindustan Unilever and the two-wheelers as TVS Motor Company , Hero MotoCorp, Mahindra & Mahindra)
5. Jefferies also expects Additionally, a reduction in the borrowing target, which should be positive for rate-sensitive companies like real estate developers and Non-Banking Financial Companies (NBFCs).
6. Tobacco taxation changes of lower than 5-7% could be seen positive for ITC as per Jefferies.
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