Union Budget 2024 is likely to strike a balance between capex spending and addressing rural challenges, as higher-than-expected RBI dividend provided some cushion to move further towards welfare schemes, Axis Securities said in its Budget 2024 note. The stock market is keenly watching developments towards the capital gains tax and deviation from market expectations could attract some negative reaction in the short term, the brokerage said while suggesting the chance of it occurring appear slim. Below are the sectors and stocks that could gain from Budget 2024 announcements:
BFSI
Axis Securities expects the Budget will continue to emphasize on capital expenditure and focus on power and renewable energy. It anticipated as higher allocation and an increased number of schemes focused on power and renewable energy in the upcoming budget. Some announcement over privatisation of certain PSU banks is likely.
Affordable housing financiers could be in focus as the forthcoming budget may indicate a renewed emphasis on housing schemes in the rural market. It sees State Bank of India (SBI), Bank of Baroda (BOB), Canara Bank, HDFC Bank Ltd and ICICI Bank as likely beneficiaries.
PFC, REC and IREDA could remain in focus. Axis Securities said it is also positive on rural-focused housing financiers such as Aptus, India Shelter Finance and Aavas and SFBs pursuing growth with rural presence.
Infrastructure
The major focus is anticipated to be on key infrastructure segments such as roads, railways, airports, and urban infrastructure. With the government focusing on expanding the road network, a 10-15 per cent higher allocation YoY for the Ministry of Road Transport & Highways is expected. Similarly, railways should also witness a higher budgetary allocation in 2024.
Axis Securities sees dedicated allocation to larger infrastructure projects like Jal Jeevan Mission, High-Speed Rail, Smart Cities, and Inland Waterways Development is expected, supporting the broader objectives of the National Infrastructure Pipeline (NIP).
“With the heightened government focus on developing the overall infrastructure of the country, particularly in highways, railways, and urban infrastructure, companies operating in these segments are poised to encounter massive opportunities. Stocks: KNR Constructions, PNC Infratech , RITES, KEC International, J Kumar Infraprojects and Ahluwalia Contracts,” it said.
Cement
Anticipated increased funding for rural infrastructure development, particularly through Pradhan Mantri Gram Sadak Yojna and Pradhan Mantri Awas Yojna (Rural), is expected to facilitate more substantial funds for development. Augmented allocations to government schemes are set to provide further impetus to cement consumption, it said adding that the government may greenlight a new housing loan scheme tailored for the urban poor and middle class, offering loans up to Rs 50 lakh with interest subvention.
UltraTech Cement, Ambuja Cements, Dalmia Bharat, JK Cement, JK Lakshmi and Birla Corp are among stocks that may benefit from the Budget announcements, Axis Securities said.
Auto & auto ancillary
The Budget announcements may benefit rural-focused two-wheeler makers and entry-level four-wheeler OEMs, along with auto ancillary companies supplying to such OEMs. The introduction of the FAME-III subsidy from Jul’24 onwards, with a focus on charging infrastructure, will significantly boost the sector, Axis Securities said.
The brokerage said reduced and uniform GST rates (18 per cent) on auto components aim to minimise the issues of grey operations and counterfeits stemming from the high (28 per cent) GST rate. The EV industry expects the GST on ACC (Advanced Chemistry Cell) batteries to be reduced and brought on par with EVs (5 per cent). The government needs to consider commercial EV financing to facilitate rapid adoption in the E4W category, the brokerage said.
“A long-term sustainable roadmap in the PLI space, particularly focusing on the MSME segment, which forms the
backbone of our economy, is crucial,” it said. Axis Securities likes Mahindra & Mahindra and Hero MotoCorp among rural plays, Minda Corp Sansera Engineering as auto component plays, Servotech Power and Bosch as EV charging infra plays.
Utilities & power ancillary
On the taxation side, the industry expects a reduction in GST on renewable energy components like solar devices to boost the renewable space. A removal/reduction of custom duty on imported renewable components like solar modules or storage batteries can be expected, Axis Securities said. To boost the transition to sustainable energy, budgetary allocation is expected to rooftop solar installations (in line with Suryodaya Yojna) and to alternative sources of energy like Compressed Biogas (CBG), Ethanol, and Green Hydrogen.
“In the interim budget, the National Green Hydrogen Mission had increased the budgeted expenditure for FY25 to Rs 600 crore. Further increase in the same is expected to provide a boost to Green Hydrogen energy in India. The industry expects support for the hydropower sector through the establishment of a nodal agency dedicated to
hydropower development,” Axis Securities said.
It likes power generating stocks such as NTPC Ltd, CESC Ltd, Tata Power Ltd and JSW Energy Ltd. Among power EPC or component makers, it sees Inox Wind, Suzlon Energy Ltd. Sterling & Wilson Renewable Energy as beneficiaries. Among Por distribution stocks, Axis Securities sees Power Grid and Jyoti Structures as likely beneficiaries.
Real estate
For real estate sector, Axis Securities expect future plans related to PMAY-HFA, which aims to provide affordable housing for all in urban areas. he upcoming budget could reflect a renewed focus on affordable housing schemes in rural markets. Besides, the budget may emphasise enhancing digital infrastructure, potentially offering incentives to boost data centers and smart cities. Axis Securities said it prefers big brands like Prestige Estates, Macrotech Developers and Godrej Properties. It likes being a play on data center. It is also positive on developers in urban areas such as MICL and TARC.