Following the announcement of the Union Budget 2022-23, brokerage firm Axis Securities believes that this budget is a growth-oriented budget that properly emphasizes spending efficiency while achieving economic development solid. The brokerage said in a research report that “the Union budget for FY23 focused on the Gati Shakti mission through which the government plans to give a significant boost to infrastructure development. This includes a boost for roads, railways, airways, ports, mass transit, waterways, and logistics infrastructure development The government has increased budgeted capital expenditure by 35 %, but adjusting for some spending, spending growth will be in the double digits.Key sectors that are expected to benefit from capital spending are Cement, Infrastructure Companies, Metals and Capital Goods.The Cement Sector should see an improvement in its traction, as fiscal support will come from infrastructure spending as well as housing spending.”
The brokerage is neutral on the consumer and automotive sector and therefore reported that “While the focus is on electric vehicles, no significant announcements have been made for the automotive sector. The programs LIPs are continuing and we expect further announcements in this space at regular intervals as this continues to be one of the main areas of government intervention. “Tax has not dampened the consumer sector. Nevertheless, the focus on job creation and improved infrastructure will support growth prospects and fuel future growth in overall consumption.”
Brokerage, on the other hand, is bullish in the banking sector and pointed out that “support to MSMEs and SMEs was extended in FY23 with an increased allocation of Rs 50,000 Cr to the hospitality sector. , affordable housing loans should Increase in capital spending will also help banks to improve credit growth Although these are positive attributes, mainly due to an excellent nominal growth rate during the l ‘FY23, banks’ cost of funds is expected to increase, on the other hand, will increase and remain in the range of around 7% for FY23. This is manageable for banks and may even be helpful as margins may increase . »
Based on the finding, the brokerage picks Federal Bank, City Union Bank, CanFin homes, Polycab, Ambuja Cement, KNR Construction, HG Infra, Asian Paints and ABFRL, Hindalco as its top post-budget statement picks.
Axis Securities also noted that “the extension of the ECLGS program and other measures for the MSME segment is positive for the entire banking sector, in particular for medium-sized MSME lenders such as City Union, Federal Bank and DCB Bank, among others. The IBC process will expedite NPA resolutions. Therefore, positive for all banks, especially for PSU banks. An increase in capital spending should boost credit growth in the banking sector. Positive for the entire banking sector. No announcement on PSB privatization is slightly negative for PSU banks, especially lower-tier PSBs. Short-term LIC IPO expectations may boost Demat account openings, which will be positive for stocks such as CDSL.
According to the brokerage “A higher budget allocation towards construction and infrastructure (60% of steel demand) is positive for metals companies. A 35% increase in capital expenditure year-on-year to 7.5 Lc Cr and Specific Housing for All (PMA) Investments of Rs 48,000 Investments of Rs 60,000 Cr for Cr and National Rural Drinking Water Mission for FY23 will be positive for metals demand.
For investment-related articles, business news and mutual fund tips
Article first published: Friday, February 4, 2022, 11:05 a.m. [IST]