On the overall basis, long-term capital gains tax doesn’t look dampening and revenue growth assumptions are looking realistic. Investors should focus on sectors/stocks having agri or rural theme. Escorts, Ashok Leyland, M&M, PI Inds and UPL will be positive.
The Finance Minister Arun Jaitley delivered the complete opposite of what the D-Street was expecting. Nevertheless, D-Street put up a brave face as the finance minister tinkered with the long-term capital gains tax (LTCG).
It was a political budget but at the same time balanced. Although, the rise in the fiscal deficit, as well as 10 percent tax on LTCG, might come as a disappointment to investors which is likely to be a short-term negative for D-Street.
However, after knee-jerk reaction the focus will shift back to earnings, say experts. The Disinvestment target of Rs80,000 crore for 2018-19 is conservative but again lacks boldness in divesting non-core assets.
“The Budget, being the last one before a general election was expected to tilt toward the voting populace and so it has played out accordingly. The MSME segment which bore the full brunt of the disruptions last year has been given some succour.
Now, that the event is behind us, it is likely the market would take the changes in its stride over the next few weeks and focus more on actual earnings which look like they should have a better year than at least the last few.
The focus of the Budget was largely on infrastructure, healthcare, education, agriculture sectors. Hence, the next set of multibaggers will come from this theme which is also the crucial question - where should investors put their money? Are there any stocks which are likely to gain the most from Arun Jaitley’s Budget 2018?
“On the overall basis, long-term capital gains tax doesn’t look dampening and revenue growth assumptions are looking realistic. Investors should focus on sectors/stocks having agri or rural theme. Escorts, Ashok Leyland, M&M, PI Inds and UPL will be positive,” Hemang Jani, Head Equity Sales & Advisory, Sharekhan told Moneycontrol.
“Other picks include names like Apollo Tyre: Raise in customs duty on truck-bus radial tyres from 10 to 15 percent to benefit the company. ITC: No increase in tax rates on Cigarettes – Qtrly nos have been in-line,” he said.
We have spoken to various experts and here are 20 stocks which are likely to benefit the most from the Budget, do you own any?
Analyst: Vinod Nair Head of Research at Geojit Financial Services
Escorts
Escort Ltd (EL) will be a direct beneficiary owing to the government focused approach to encourage farm mechanization and growth in infrastructure segment.
The total allocation for Rural, Agriculture and Allied sectors was Rs2 lakh core which is 10% higher than the previous budget.
Agricultural credit has also increased by 10% and fixed at a record level of Rs11 lakh crores, which is expected to drive demand for tractors. Similarly, Bhart mala projects will create additional demand for construction equipment’s segment.
Interglob Aviation (Indigo)
In the last 3 years, the Indian domestic air passenger traffic grew at 18% per annum, while domestic carriers were facing congestion in major airports.
Considering this, the proposal for increasing the capacity of 124 airports by 5 times is expected to boost the number of flights operated, higher traffic growth and operational efficiency. Indigo will be a key beneficiary from this move given in 40% in Indian aviation sector.
UPL Ltd:
The Minimum support price (MSP) of 1.5 times of the cost of production for notified crops and increase in Institutional credit for the agriculture sector to Rs.11 lakh crore is expected see an uptick in the area under cultivation which will boost demand for seeds and crop protection.
UPL with presence across agri-input value chain from seeds to post-harvest chemicals will be a key beneficiary from this.
Larsen & Toubro (L&T)
Allocation for NHAI and Roads & Bridges has increased by 16% to Rs 70,544cr from 60,671cr This will improve the outlook for infrastructure, EPC and BOT companies like L&T.
Additionally, the government is targeting to complete 9,000km of the national highway in FY18 which will help to rejuvenate the current execution cycle of EPC companies.
NBCC (India) Ltd
Urbanization is another priority for the government, like smart city and AMRUT. The total cash outlay is expected to be Rs2.04lakh crore, with as many 99 cities selected under the ambitious Smart city mission.
NBCC has been a Navaratna enterprise under Ministry of Urban development having expertise in executing large projects, is expected to be a key beneficiary.
Analyst: Rakesh Tarway, Head Research, Reliance Securities
HUL, Hero Motocorp, ITC, Godrej Agrovet:
Government impetus on rural spending will have a far-reaching impact on growth rates of country and reduction of income gaps in society. Companies and sectors deriving the majority of revenues from the rural economy like 2 wheelers, FMCG Companies, fertilizer companies will benefit from the push to rural spending.
KNR Construction, J Kumar, NCC, JK Cement and Sagar Cement:
Budget 2018 continued to put a strong focus on infrastructure development, which is in line with the expectations. FM has allocated an extra-budgetary support of Rs5.97 lakh crore compared to Rs3.96 lakh crore in the last budget for the infrastructure sector, which is encouraging as India needs a large amount of investment in infrastructure due to growing needs.
We understand higher allocation in infrastructure segment will essentially expedite infrastructure development in the country, which in turn will aid many industries i.e. metals, cement, building materials, etc.
We like construction companies like KNR Construction, J Kumar, NCC to play infrastructure theme from the budget. We also like cement companies like JK Cement and Sagar Cement to benefit from push to infra.
Thyrocare and Dr. Lal Path Labs:
Union Budget has also proposed coverage of Rs 5Lac per household to total 10 Cr households for hospitalization. The move will benefit hospital chains like Apollo Hospitals and Narayana Hrudyalay.
It will also have a positive rub-off impact on companies like Thyrocare and Dr. Lal Path Labs. Insurance companies will also benefit because of insurance premium received towards coverage of families.
Gruh Finance, DHFL, and Can Fin Homes:
Among other major initiatives budget has proposed the creation of affordable housing fund under NHB. This will benefit all affordable housing players like Mahindra Lifespace, Ashiana Housing etc.
It will also have a positive impact on affordable housing financiers like Gruh Finance, DHFL, and Can Fin Homes.
Apollo Tyres and JK Tyre:
Within tax proposals, the budget has proposed to increase customs duty on imported Truck and Bus Radials from 10-15 percent, which will benefit companies like Apollo Tyres and JK Tyres who have major exposure towards truck tyres.
MORE WILL UPDATE SOON!!
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