Budget impact: Sectors and stocks

NDTV Correspondent

Tuesday, July 07, 2009 (New Delhi)

The Budget 2009 is seen to have a positive impact for auto, cement and IT sectors. On the other hand, it is seen to have a negative fallout for the banking sector.

1. Auto: Positive

Measure	Impact
Excise duty on petrol driven trucks cut to 8% vs 20%	Positive for M&M, Tata Motors
Reduced duty charged on utility vehicles from Rs 20,000 to Rs 15,000	Positive for M&M, Tata Motors
Benefits to farmers: subsidies, loan waivers	Positive for Eicher Motors, Escorts, M&M, Hero Honda
Allocation to NHAI increased	Positive for M&M, Tata Motors, Ashok Leyland
JNNURM allocation raised by 80%	Positive for Ashok Leyland and Tata Motors

2. Banking: Negative

Hike interest subvention on farm credit from 2% to 3% in order to boost credit
Now farm loans would be disbursed at 6% by the banks instead of 7%
No mention of cut in small savings - also a negative for banks
Retaining public sector nature of banks seen as an indicator of slow process of consolidation & reforms

Companies to be impacted

All PSU banks

Budget: Capital infusion in PSU banks to keep them competitive

Cos to be impacted

Neutral for all mid-sized PSU banks
Earlier Govt had infused Rs.3800cr in UCO Bank, Vijaya Bank & Central Bank of India

3. Cement: Positive

Excise duty on cement unchanged
Service tax on transport is done away with
Service tax on logistics is reduced

4. Exporters: Positive

Interest subvention on exporters extended to 2010
Current interest subvention at 2%
Exporters wanted interest subvention restored to 4%

5. Fertilisers: Neutral

Aiming for direct transfer of subsidy to farmers
To move towards nutrient based subsidy regime

6. Gems & jewellery: Mixed

Branded jewellery excise duty abolished
Basic customs duty on Gold & Silver increased
Tax holiday for exporters extended till 2010
2% interest subvention for exporters till 2010
Procedure for refund of service tax simplified for exporters
Extension of Sunset Clause by another year for exporters

7. IT: Positive

Measures	Impact
Extension of STPI by one year to Mar'2011	HCL Tech major beneficiary, positive for all companies
Provision of Rs.120cr for this project	Positive for CMC, Bartronics, Mindtree,3i Infotech, Tulip Telecom
FBT abolished	Positive for all players ; FY'10 EPS gain by 1%-2% for top 4 players
MAT increased from 10%-15% ( to be set off over 10 yrs from 7 yrs earlier)	Hit of upto 1% in FY'10 EPS seen
Packaged software to be exempt from excise duty of 12%	Positive for all players, will lead to lower operational costs

8. Oil & gas: Mixed

Measures	Cos To be Impacted
Tax holiday extended for natural gas production	Positive for E&P players like RIL , ONGC , Cairn , GSPC
Tax holiday for block under NELP with retrospective effect
To set up expert group for petroleum pricing	Negative sentiment impact on oil marketing companies & upstream companies
Indigenous production of natural gas set to double	Positive for GAIL , RIL , Indraprastha Gas , Gujarat Gas , GSPL , Petronet LNG
National gas highway to be set up	Positive for Pipe Makers: Maharashtra Seamless, India Seamless , Jindal Stainless, Welspun

9. Textiles: Mixed

Measures

Restoring 4% excise duty on cotton textiles
Keeps 8% central excise duty on man-made fibre & yarn
Tax holiday for exporters extended till 2010
2% interest subvention for exporters till 2010

Impact

It’s an extension of the stimulus package provided for one more year
Liquidity issues for textile cos may improve slightly
Not to drastically effect any textile companies

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	"I am disappointed with the Budget. The shipping and shipbuilding industry generates a lot of revenues and employment. But it finds no mention of the sector in the Budget." PC Kapoor, Managing Director of Bharati Shipyard
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