UNION BUDGET 2021-22 Impact - UNION BUDGET 2021-22 - IMPACT - IDBI Direct
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
UNION BUDGET 2021-22 - IMPACT
February 1, 2021
UNION BUDGET
2021-22
Impact
1
Research TeamUNION BUDGET 2021-22 - IMPACT POSITIVE
Auto: Boost to infrastructure and agricultural spending activities
Measure Meaning Stock Impact
Vehicles would undergo fitness tests in Would encourage buyers to opt for new Positive for CV industry.
automated fitness centers after 20 years vehicles. ~1.7mn M&HCV’s are older than
in case of personal vehicles, and after 15 years without fitness certificates.
15 years in case of commercial vehicles.
Rs18k crs to support augmentation of Would increase demand for new buses Positive for Tata Motors, Ashok Leyland
public bus transport services. The and VECV
scheme will facilitate deployment of
innovative PPP models to enable private
sector players to finance, acquire,
operate and maintain over 20,000
buses.
Allocation of Rs1.18 lakh crore for rural Would increase infrastructure activities Positive for Tata Motors, Ashok Leyland,
roads in FY22 compared to Rs1.01lakh which help all the CV manufacturer VECV
crore in FY21.
Enhanced agriculture credit and Demand for tractors to increase Positive for M&M, Escorts etc.
doubled the Micro Irrigation Fund
corpus to Rs10,000crs would boost the
agriculture activities.
2UNION BUDGET 2021-22 - IMPACT
New Import Duty Rates
New Rate of
Items ACMA Description Import Duty
Import Duty
Toughened (tempered) safety glass
of size and shape suitable for incorporation in vehicles, aircraft, Interior (non-electronic) 10% 15%
spacecraft or vessels.
Bullet proof glass Interior (non-electronic) 10% 15%
Safety glass for vehicles- others Consumables & Misc. 10% 15%
Gas compressors: Turbo Charger Engine Components 7.5% 15%
Parts (parts of electrical lightining or
signaling equipment, windscreen, wipers, defrosters and demisters, Electrical & Electronics 7.5% 15%
of a kind used for motor vehicles
Ignition, wiring sets and other wiring sets of a kind used in vehicles,
Electrical & Electronics 10% 15%
aircrafts or ships
Other: Frames and forks, and parts thereof Body/ Chassis/ BiW 10% 15%
Other (Vehicle Parts) Body/ Chassis/ BiW 10% 15%
Other (Hubs, hub brakes and Vehicle parts) Body/ Chassis/ BiW 10% 15%
Brakes, including coaster braking hubs and hub brakes, and parts thereof Suspension & Braking 10% 15%
Pedals and crank-gear, and parts thereof Drive Transmission & Steering 10% 15%
Other (Vehicle Parts) Suspension & Braking 10% 15%
Source: IDBI Capital Research
3UNION BUDGET 2021-22 - IMPACT
Valuation
CMP TP Mkt Cap Revenue (Rs mn) Ebitda (Rs mn) EPS (Rs) PER (x) EV/EBITDA (x) RoE(%)
Companies
(Rs) (Rs) Reco (Rs mn) FY22E FY23E FY22E FY23E FY22E FY23E FY22E FY23E FY22E FY23E FY23E FY23E
OEMs
ASHOK LEYLAND 122 86 HOLD 3,58,868 1,78,948 2,22,595 17,000 26,868 2.0 4.3 60.9 28.4 21.7 13.2 15.7 17.4
BAJAJ AUTO 4,114 3,385 REDUCE 11,90,485 3,26,148 3,74,198 60,682 71,045 192.6 225.6 21.4 18.2 19.3 16.3 24.2 24.8
EICHER MOTORS 2,844 2,460 HOLD 7,77,076 91,515 1,14,371 18,762 23,420 72.0 92.8 39.5 30.7 40.3 32.3 18.6 13.2
HERO MOTOCORP 3,344 2,540 REDUCE 6,68,023 2,97,695 3,46,561 39,131 46,825 139.5 169.1 24.0 19.8 16.6 13.7 19.1 21.5
MARUTI SUZUKI INDIA 7,400 7,912 ACCUMULATE 22,35,378 7,36,366 9,01,998 81,648 1,01,009 212.4 250.9 34.8 29.5 26.1 20.4 13.1 10.1
TVS Motor Co 578 595 ACCUMULATE 2,74,363 1,94,856 2,20,825 16,751 20,064 16.6 21.3 34.8 27.2 16.5 13.4 20.0 20.8
Auto Anc.
GNA Axles 391 388 ACCUMULATE 8,390 9,085 9,682 1,408 1,501 32.4 35.2 12.1 11.1 6.3 5.5 12.5 14.3
Jamna Auto Industries 64 58 BUY 25,621 10,330 12,912 1,229 1,666 1.8 2.5 36.0 25.5 20.7 15.0 15.9 18.7
Lumax Auto Technologies 128 78 SELL 8,721 11,065 12,396 830 930 5.5 6.5 23.2 19.7 10.2 8.9 8.4 6.9
Minda Industries Ltd 467 350 HOLD 1,26,882 66,414 77,927 7,173 9,975 7.8 14.6 60.1 32.1 18.6 13.1 15.9 13.9
MM Forgings 506 380 BUY 12,210 7,464 8,450 1,493 1,732 29.2 39.1 17.4 12.9 8.9 7.2 16.1 13.3
Subros Limited 337 233 REDUCE 21,971 17,453 20,943 1,798 2,241 9.4 13.7 35.9 24.6 11.4 8.6 10.3 11.9
Source: IDBI Capital Research
4UNION BUDGET 2021-22 - IMPACT POSITIVE
BFSI : Positive for PSU banks and Insurance sector
Measure Impact Stocks Impacted
FDI limit increased from 49% to 74% in Enhanced capital flow to Insurance sector Positive for all the Insurance companies.
Insurance companies allow foreign and will improve the penetration levels.
ownership and control with safeguards.
An ARC and AMC step to consolidate Helps to make banks clear their balance Positive for all banks specially PSU banks
and take over the existing stressed debt. sheets and resolve bad debts.
Recapitalization of Rs200bn for PSBs Improve the capital adequacy ratios for Positive for smaller PSU Banks which are
the PSU banks struggling for capital.
Eligibility limit for NBFCs for debt Smaller NBFCs can improve the recovery Boost for smaller NBFCs
recovery under SARFAESI Act proposed through SARFAESI
to be reduced from loan size of `50 Lakh
to 20 Lakh.
Fiscal deficit target for FY20 increased Bond yields could rise Negative for Banks specially PSU banks
to 9.5% for FY21. Also, borrowings from
market by government increased
Tax holiday for Affordable housing Additional tax soaps to boost smaller to Positive for all HFCs
increase for one more year medium ticket home loans.
NCLT framework will be strengthened e- Faster resolution of cases and recoveries Positive for all Banks and NBFCs.
Courts system shall be implemented should improve.
and alternate methods of debt
resolution
Overall Ulip intensity could get limited
Removal of tax implications on Ulip Negative for high ticket size insurance
beyond annual premium of Rs.250k players in the industry.
5UNION BUDGET 2021-22 - IMPACT POSITIVE
Valuation
Market
CMP TP NII (Rs bn) Op Pft (Rs bn) PAT (Rs bn) EPS (Rs) ABVPS (Rs) PER (x) P/ABV (x) ROA (%) ROE (%)
Cap
(Rs Bn) (Rs) (Rs) Reco FY22E FY23E FY22E FY23E FY22E FY23E FY22E FY23E FY22E FY23E FY22E FY23E FY22E FY23E FY22E FY23E FY22E FY23E
Banks
Axis Bank 2,172 709 735 BUY 324 357 280 311 89 115 29.0 37.6 378.9 409.5 24.5 18.9 1.9 1.7 0.9 1.0 7.5 9.0
DCB Bank 34 108 125 ACCUMU. 13 14 7 8 3 4 10.4 11.8 121.9 138.4 10.4 9.1 0.9 0.8 0.8 0.9 8.2 8.6
Federal Bank 154 77 90 BUY 59 65 37 40 19 22 9.5 11.0 80.0 89.1 8.1 7.0 1.0 0.9 0.9 1.0 11.3 11.9
HDFC Bank 8,136 1,477 1,740 BUY 745 859 665 787 380 474 69.4 86.4 419.4 484.6 21.3 17.1 3.5 3.0 2.0 2.2 17.5 18.8
IndusInd Bank 735 971 1,050 BUY 125 137 92 100 46 60 61.2 79.3 583.6 655.2 15.9 12.2 1.7 1.5 1.3 1.6 10.8 12.5
ICICI Bank 4,169 604 670 BUY 417 465 360 412 160 188 23.2 27.2 228.8 260.5 26.1 22.2 2.6 2.3 1.3 1.3 10.2 10.4
Housing Finance
HDFC 4,643 2,579 2,200 UR 175 196 188 210 125 140 70.2 78.2 573.6 621.2 24.0 21.5 3.1 2.9 2.1 2.1 11.1 12.0
Repco Home Fin 16 253 250 HOLD 5 6 4 5 3 3 42.6 54.0 308.4 356.6 5.9 4.7 0.8 0.7 2.1 2.4 12.6 14.1
Gold Finance
Manappuram Fin 139 164 220 BUY 43 48 26 30 18 21 21.2 24.9 99.9 120.5 7.7 6.6 1.6 1.4 5.3 5.6 22.8 22.3
Muthoot Fin 464 1,156 1,450 BUY 68 75 47 52 34 37 84.0 93.5 397.4 470.0 13.8 12.4 2.9 2.5 5.6 5.7 22.1 20.8
Vehicle Finance
Cholafin 363 443 515 BUY 46 52 33 39 20 25 24.2 30.5 128.4 141.2 18.3 14.5 3.5 3.1 2.6 2.9 19.2 20.1
Source: IDBI Capital Research
6UNION BUDGET 2021-22 - IMPACT POSITIVE
Building Material: Positive for pipes, tiles, sanitaryware and faucets manufacturers
Measure Impact Stocks Impacted
Under Jal Jeevan Mission (Urban) It will lead to higher demand and Positive for Pipe manufacturers such as
universal water supply in 4,378 Urban consumption of pipes used in irrigation as Astral Polytechnik, Finolex, Supreme
Local Bodies with 2.86 crores household well as carrying potable water for Industries, Prince pipes, Shakti pipes etc.
tap connections, as well as liquid waste households.
management in 500 AMRUT cities will be
implemented over 5 years with an
estimated outlay of Rs2.8trillion.
The Micro Irrigation Fund corpus has Promotion of affordable housing and tax Positive for tiles, sanitaryware and
been doubled to Rs10,000crores holiday to such projects will drive faucets companies like Kajaria, Cera
incremental demand for tiles, Sanitaryware, Somany ceramic, Asian
Under affordable housing, an additional
sanitaryware and faucets. Granito etc.
deduction of interest amounting to Rs1.5
lakh, for loan taken to purchase an
affordable house will get an extension of
one more year to 31st March,2022.
Further, affordable housing projects can
avail a tax holiday for one more year – till
31st March, 2022.
Valuation
CMP TP Mkt Cap Revenue (Rs mn) Ebitda (Rs mn) EPS (Rs) BVPS (Rs) PER (x) P/B (x) EV/EBITDA (x) RoE(%) RoCE(%)
Companies
(Rs) (Rs) Reco (Rs mn) FY22E FY23E FY22E FY23E FY22E FY23E FY22E FY23E FY22E FY23E FY22E FY23E FY22E FY23E FY23E FY23E
Astral Polytechnik 1,715 1,386 BUY 258,470 31,716 36,157 5,392 6,436 25.8 30.9 163 191 66.4 55.5 10.5 9.0 47.3 39.4 17.2 20.5
Supreme Industries 1,809 1,795 HOLD 229,804 62,328 69,674 10,873 12,383 51.2 59.8 243 282 35.4 30.2 7.5 6.4 21.0 18.2 22.8 26.1
Kajaria Ceramics 824 910 BUY 131,154 30,932 34,954 5,784 6,746 21.4 25.8 120 128 38.6 32.0 6.8 6.4 22.2 18.9 21.0 23.2
Finolex Industries 578 603 BUY 71,671 33,882 37,948 5,335 6,128 28.1 33.1 187 208 20.5 17.5 3.1 2.8 13.1 11.0 16.6 18.3
Cera Sanitaryware 3,413 2,930 BUY 44,392 13,466 15,485 1,738 2,127 87.5 108.5 725 820 39.0 31.5 4.7 4.2 25.2 20.3 14.1 14.1
Somany Ceramics 370 274 BUY 22,724 15,598 18,055 1,669 2,131 13.5 21.0 162 181 27.3 17.6 2.3 2.0 15.3 11.6 12.3 11.1
Source: IDBI Capital Research
7UNION BUDGET 2021-22 - IMPACT POSITIVE
Cement: Rub off impact from higher allocation to infra
Measure Impact Stocks Impacted
Total Capital expenditure is increased Increase in the capital expenditure is UTCEM IN, ACEM IN, ACC IN, SRCM IN
by 26% (vs FY21RE ) to Rs5.54t. positive for the sector. But lower
allocation in PMAY is cause of concern for
retail demand. As this has been one of
the main driver of cement demand in
Rural India in FY21E.
PMAY (Pradhan Mantri Awas Yojna): A) increase in the allocation in road and
allocation decreased by 32% to Rs275bn infra, B) Continuation of Interest benefit
vs FY21E RE under affordable housing scheme to
increase cement demand under non trade
segment.
Affordable housing: A) Extension of
additional deduction of Rs1.5lakh
interest on loans for affordable housing
loan to 31 March 2022. B) Extension by
a year to 31 March 2022 on the profits
earned by developers of affordable
housing project.
Various announcement for construction
/ Infra sector (detailed in previous page)
Source: IDBI Capital Research
8UNION BUDGET 2021-22 - IMPACT POSITIVE
Cement: Contd.
Valuation
CMP TP Mkt Cap Revenue (Rs mn) EPS (Rs) PER (x) EV/EBITDA (x) RoE(%) RoCE(%)
Companies
(Rs) (Rs) Reco (Rs mn) FY22E FY23E FY22E FY23E FY22E FY23E FY22E FY23E FY44E FY16E
Ultratech Cement 5,742 5,744 HOLD 16,57,400 4,87,670 5,36,822 209.7 242.1 27.4 23.7 14.6 13.1 13.3 15.2
Shree Cement 24,479 22,517 HOLD 8,83,222 1,39,175 1,46,874 649.9 637.0 37.7 38.4 21.3 21.0 13.3 13.6
Ambuja Cement 261 222 HOLD 5,18,551 1,27,878 1,33,223 8.9 9.0 29.4 28.9 18.1 17.0 7.3 8.2
ACC 1,685 1,879 BUY 3,16,431 1,58,178 1,64,732 63.5 66.2 26.6 25.5 11.5 11.0 8.9 12.2
Source: IDBI Capital Research
9UNION BUDGET 2021-22 - IMPACT POSITIVE
Construction: Various steps undertaken
Measure Impact Stocks Impacted
Allocations to Ministry of Roads Focus is shifting to construction vs award. The move is positive for most road
Transport and Highway at Rs1.18tn is up This is positive as most of the company construction players. ASBL IN, DBL IN,
by 16% vs FY21E RE are sitting with high order book. PNCL IN, KNRC IN, SADE IN
Target to award 8500km of roads and Steps on Financing to allay funding
construct 11000km of national concerns on NIP (National Infra Pipeline).
highways in FY22. In FY21E target of And Asset monetization by NHAI and
award is 12650km and construction is other agencies to improve the balance
10250km. sheet
Steps on Infra financing: a) Set up DFI An Asset Monetization dashboard will
with capital outlay of Rs200bn, this will also be created for tracking the progress
be leveraged to create funding of Rs5tn. and to provide visibility to investors.
B) National Monetization Pipeline” of
potential brownfield infrastructure
assets will be launched.
Relax conditions relating to prohibition
on private funding, restriction on
commercial activities, and direct
investment in infrastructure by foreign
Sovereign Wealth Funds and Pension
Funds
Source: IDBI Capital Research
10UNION BUDGET 2021-22 - IMPACT
Capital Expenditure by Ministry of Road Transport and Highways to increase 16%
Change
Rs bn FY20 FY21 BE FY21E RE FY22E BE FY21 RE vs FY21 BE FY22 BE vs FY21 RE
Ministry of Road Transport and Highways 78,111 91,656 1,01,656 1,17,947 11% 16%
National Highways Authority of India 31,691 42,500 49,050 57,350 15% 17%
Road Works 46,292 48,759 52,358 60,241 7% 15%
Works Financed from PBFF 13 18 18 20 0% 10%
Research, Training and Studies 140
Research, Training, Studies 8 379 231 336 -39% 46%
Actual Recoveries -33
Source: Budget Documents
RE= Revised Estimate
BE= Budget Estimate
11UNION BUDGET 2021-22 - IMPACT POSITIVE
Railway & defence: Target increased by double digit
Measure Impact Stocks Impacted
Ministry of Railway Capital expenditure Railway expenditure increase is positive Move is positive for Rail EPC companies
is increased by 33% to Rs2.15tn over for Rail EPC and electrification target for like RVNL, IRCON, RITES
FY21E RE. broad gauge is maintained
Target to take Broad Gauge Route Higher capital expenditure augers well BHE:IN, HNAL:IN, BDL:IN, MAZDOCKS:IN,
Kilometers (RKM) electrification to for Government’s approach for increasing COCHIN:IN; BHFC:IN
46,000 RKM i.e., 72% by end of 2021 the share of indigenization and would
from 41,548 RKM on 1st Oct 2020. And benefit domestic manufacturers
100% electrification of Broad-Gauge
routes by December, 2023
For Defense, FY21 revised capital
expenditure increased by 18% to Rs1.34
tn and maintained at Rs1.35 tn levels
for FY22.
• For Air Force it has been increased
by 27% to Rs550 bn for FY21
(revised); For FY22 it is budgeted at
Rs532 bn.
• For Navy it has been increased by
41% to Rs375 bn for FY21 (revised);
For FY22 it is budgeted at Rs332 bn.
Source: IDBI Capital Research
12UNION BUDGET 2021-22 - IMPACT
Indian Railway capex is targeted to increase by 33% in FY22E
Change
Rs bn FY20 FY21 BE FY21E RE FY22E BE FY21 RE vs FY21 BE FY22 BE vs FY21 RE
New Lines (Construction) 12,683 12,477 15,003 17,015 20% 13%
Gauge Conversion 4,140 2,843 3,430 2,165 21% -37%
Doubling 22,386 21,545 22,214 26,092 3% 17%
Traffic Facilities-Yard Remodeling Others 1,626 1,725 1,740 4,126 1% 137%
Rolling Stock 37,102 35,086 41,803 37,046 19% -11%
Leased Assets-Payment of Capital Component 10,462 11,937 11,967 19,459 0% 63%
Road Safety Works-Road Over/Under Bridges 3,521 4,350 5,450 5,500 25% 1%
Track Renewals 7,803 10,599 9,201 9,268 -13% 1%
Electrification Projects 7,125 6,326 6,591 7,532 4% 14%
Other Electrical Works incl. TRD 481 780 740 850 -5% 15%
Workshops Including Production Units 2,119 2,062 2,176 1,860 6% -15%
Staff Welfare 481 682 505 650 -26% 29%
Passengers and Users Amenities 1,903 2,726 2,676 2,800 -2% 5%
Investment in Govt. Commercial Undertaking- 16,925 17,355 15,620 37,270 -10% 139%
Metropolitan Transport Projects 1,515 1,400 1,690 1,897 21% 12%
Others 5,183 3,857 5,887 6,530 53% 11%
EBR 12,609 25,292 15,000 35,000 -41% 133%
Total 1,48,064 1,61,042 1,61,692 2,15,058 0% 33%
Physical target of Indian Railway in FY22E
Change
FY20 FY21 BE FY21E RE FY22E BE FY21 RE vs FY21 BE FY22 BE vs FY21 RE
Construction of new lines (Route Kms) 360 500 300 300 -40% 0%
Gauge conversion (Route Kms) 408 600 400 500 -33% 25%
Doubling of lines (Route Kms) 1,458 1,900 1,400 1,600 -26% 14%
Rolling stock
a (i) Diesel Locomotives 33
a (ii) Electric Locomotives 795 725 725 905 0% 25%
b Coaches 7,557 6,534 4,802 6,695 -27% 39%
c wagons (vehicle units) 11,382 12,000 10,000 12,000 -17% 20%
Track renewals (Route Kms) 4,500 4,000 3,200 4,000 -20% 25%
Electrification projects (Route Kms) 4,378 6,000 6,000 6,000 0% 0%
Source: Budget Documents, RE= Revised Estimate, BE= Budget Estimate
13UNION BUDGET 2021-22 - IMPACT
Valuation
CMP TP Mkt Cap Revenue (Rs mn) EPS (Rs) PER (x) EV/EBITDA (x) RoE(%) RoE(%)
Companies
(Rs) (Rs) Reco (Rs mn) FY22E FY23E FY22E FY23E FY22E FY23E FY22E FY23E FY23E FY23E
RITES Ltd 258 342 BUY 64,425 28,163 32,543 25.0 28.5 10.3 9.0 4.6 4.0 24.2 24.3
Rail Vikas Nigam 30 27 BUY 63,176 1,64,056 1,95,262 3.9 4.6 7.7 6.6 10.9 8.9 15.0 9.2
Dilip Buildcon 440 549 BUY 60,172 1,01,572 1,11,729 39.3 51.7 11.2 8.5 4.5 3.7 14.7 17.3
KNR Constructions 406 375 ACCUMULATE 57,147 29,559 33,993 19.3 22.3 21.1 18.2 10.1 8.9 14.0 18.9
PNC Infratech 196 266 BUY 50,320 58,818 67,641 20.1 23.7 9.8 8.3 5.6 4.5 16.5 17.6
IRCON International 85 108 BUY 39,854 58,097 67,927 10.8 12.8 7.8 6.6 6.6 5.2 13.0 8.6
Ashoka Buildcon 97 110 BUY 27,230 44,139 50,759 15.6 18.7 6.2 5.2 4.8 3.7 14.5 12.7
Source: IDBI Capital Research
14UNION BUDGET 2021-22 - IMPACT NEUTRAL
Consumer and Retail: Neutral
Measure Meaning Stock Impact
Proposed custom cess of 17.5% on This will make raw material sourcing cost Mildly negative (as FMCG companies has
crude palm oil for cosmetics, soap, detergent and power to pass on the cost to customers)
packaged food manufacturing companies for; HUL, GCPL, MRCO, BRIT, ITC, NESTLE
Proposed custom cess of 20% on crude
expensive
soya bean and sunflower oil
Proposed basic custom duty of 50% and Re-structured duty on alco-bev from earlier Neutral for United Spirits, United
agri Infra cess of 100% on alcoholic 150% basic custom duty to 50% basic duty Breweries, Radico Khaitan
beverages and 100% agri infra cess leading to no
change in overall tax
Proposed reduction in custom duties to It will reduce gold and silver price Positive for Titan
7.5% from 12.5% on gold and silver
15UNION BUDGET 2021-22 - IMPACT
Consumer and Retail: contd.
Valuation
CMP TP Mkt Cap Revenue (Rs mn) EPS (Rs) PER (x) EV/EBITDA (x) RoE(%) RoCE(%)
Companies
(Rs) (Rs) Reco (Rs mn) FY22E FY22E FY22E FY22E FY22E FY22E FY22E FY22E FY22E FY22E
Hindustan Unilever 2,249 2,606 ACCUMULATE 52,84,504 5,14,847 5,67,469 64.9 70.3 34.7 32.0 26.4 24.0 116.4 120.6
ITC 216 295 BUY 26,57,289 5,32,293 5,85,973 13.3 14.6 16.3 14.8 12.5 11.2 25.1 27.9
Asian Paints 2,446 2,461 REDUCE 23,46,198 2,48,077 2,82,363 38.8 44.8 63.0 54.7 40.7 35.2 25.8 30.2
Avenue Supermarts 2,807 3,084 HOLD 18,18,174 3,65,560 4,59,616 31.9 41.0 88.0 68.5 58.7 45.5 17.0 21.6
NESTLE INDIA* 17,097 16,850 ACCUMULATE 16,48,415 1,53,019 1,71,048 269.7 306.4 63 55 44.2 39.0 62.9 49.8
DABUR INDIA 525 558 ACCUMULATE 9,28,426 1,09,113 1,18,470 11.1 12.4 47.1 42.4 38.5 34.1 24.4 24.4
BRITANNIA INDUSTRIES 3,521 4,746 BUY 8,48,206 1,48,128 1,63,105 85.3 94.9 41.3 37.1 30.7 27.2 28.7 29.6
Godrej consumer products 753 883 BUY 7,70,341 1,17,341 1,25,279 18.1 19.6 41.6 38.5 28.1 26.1 21.1 21.7
Berger Paints 722 518 SELL 7,01,081 72,810 82,614 9.1 10.4 79.3 69.7 51.5 44.3 26.1 28.0
MARICO 418 434 ACCUMULATE 5,39,107 86,203 95,619 9.9 10.9 42.2 38.4 30.7 27.7 35.3 38.7
Jubilant Foodworks 2,610 2,350 HOLD 3,44,472 47,591 53,333 39.7 47.0 65.7 55.5 28.0 24.1 29.3 25.2
Kansai Nerolac 582 540 HOLD 3,13,436 52,540 60,968 11.2 13.5 51.7 43.1 33.0 27.5 15.0 18.8
Trent 635 528 SELL 2,25,592 38,294 44,862 6.2 7.6 103.0 83.4 32.0 24.8 11.9 9.2
TCNS Clothing Co 395 488 BUY 24,315 12,990 14,425 15.7 16.3 25.2 24.3 7.0 5.3 19.2 9.2
Source: IDBI Capital Research, * Dec Y/E
16UNION BUDGET 2021-22 - IMPACT NEUTRAL
Metals & Mining: Neutral for steel companies
Measure Impact Stocks Impacted
Increase in government capex by 34.5% It will lead to higher steel consumption, Positive for steel players such as SAIL,
YoY to Rs5.5 trillion in FY22 specially long products. Tata Steel, JSW Steel, Jindal Steel &
Power.
Cutting customs duty uniformly on It will lead to slight fall in landed cost of Slightly negative for steel companies,
semis, flat and long products of non- imported steel mainly SAIL, Jindal Steel & Power, Jindal
alloy, alloy, and stainless steel to 7.5% Stainless, etc.
Revoking ADD and CVD on certain steel It will lower the landed cost of imported Slightly negative for steel players such as
products steel for some products SAIL, Tata Steel, JSW Steel, Jindal Steel &
Power.
Valuation
CMP CMP CMP Revenue (Rs mn) EPS (Rs) PER (x) EV/EBITDA (x) RoE(%) RoE(%)
Companies
(Rs) (Rs) Reco (Rs mn) FY22E FY23E FY22E FY23E FY22E FY23E FY22E FY23E FY23E FY23E
JSW Steel 368 387 HOLD 8,89,537 8,52,634 9,44,989 25.6 31.1 14.4 11.8 7.9 6.9 17.0 15.8
Tata Steel 601 576 BUY 6,77,189 14,86,456 15,25,363 59.1 73.0 10.2 8.2 6.6 6.0 9.4 8.3
Jindal Steel & Power 262 375 BUY 2,66,887 4,20,130 4,35,257 62.5 68.0 4.2 3.8 3.1 2.2 14.4 15.3
Steel Authority India 58 76 BUY 2,37,893 7,50,370 7,94,509 15.5 16.8 3.7 3.4 4.0 3.5 13.1 11.9
Source: IDBI Capital Research
17UNION BUDGET 2021-22 - IMPACT POSITIVE
Oil and Gas: Positive for Gas Utility Companies
Measures Impact Stocks Impacted
InvIT for oil & gas pipeline for GAIL, IOCL Positive for oil & gas pipeline companies
and HPCL as few pipelines like Urja Ganga, Dabhol-
Bengaluru gas pipeline of GAIL can be
monetized initially
Made the provision for petroleum With lower crude oil price, it should be
subsidy at Rs141 bn for FY22 vs Rs391 sufficient to cover any subsidy burden.
bn in FY21. Any shortfall can be made provision in
Ujjwala scheme to be extended to cover next year.
Focus on growth and higher government
additional 1cr beneficiaries.
expenditure would lead to higher
100 more districts to be added under Would be allocated through bidding petroleum products and natural gas
CGD in next 3 years. mechanism. demand growth. Further, InvIT of oil &
gas pipeline, new GA for CGD license and
Gas pipeline project to be taken up in GAIL or GSPL are likely candidate if
20K new buses may propel natural gas
J&K allocated through bidding mechanism.
demand growth. Overall, neutral for
To setup an Independent Gas Transport Should lead to better efficiency in gas OMCs but positive for gas utility
System Operator to facilitate natural gas transportation. Would await for more companies like GAIL, Petronet, GSPL and
movement on common carrier capacity clarity. CGDs like IGL, MGL and Gujarat Gas.
on a non-discriminatory open access
basis
Expect Divestment of BPCL in FY22 Largely expected by the market.
Source: IDBI Capital Research
18UNION BUDGET 2021-22 - IMPACT POSITIVE
Oil and Gas: Contd.
Revised duty structure
Petrol Diesel
Duty structure (Rs/ltr)
Earlier New (Budget 2021-22) Earlier New (Budget 2021-22)
Specail additional excise duty 10.0 11.0 9.0 8.0
Basic excise duty 5.0 1.4 4.8 1.8
Road Cess 18.0 18.0 18.0 18.0
Agriculture Infrastructure & Development Cess - 2.5 - 4.0
Total 33.0 32.9 31.8 31.8
Valuation
CMP TP Mkt Cap Revenue (Rs mn) EPS (Rs) P/E (x) EV/EBITDA (x) RoE(%) RoCE(%)
Companies
(Rs) (Rs) Reco (Rs mn) FY22E FY23E FY22E FY23E FY22E FY23E FY22E FY23E FY23E FY23E
Bharat Petroleum Corp 384 412 BUY 8,32,668 24,11,289 29,86,550 33.6 34.8 12.2 11.8 9.5 9.0 16.1 9.4
Gail India 125 109 BUY 5,65,797 6,44,697 6,84,316 12.2 12.8 10.0 9.6 7.1 6.4 11.1 9.1
Gujarat State Petronet 198 306 BUY 1,11,686 28,613 31,449 24.0 27.5 9.3 8.1 5.9 4.8 16.8 19.3
Hindustan Petroleum Corp 219 253 BUY 3,26,912 23,84,011 29,08,622 39.0 38.9 5.6 5.6 6.4 6.8 15.8 5.8
Indian Oil Corporation 93 86 ACCUMULATE 8,78,341 42,31,243 51,37,558 12.8 12.6 7.1 7.3 7.4 7.4 10.9 7.6
Oil India 111 90 HOLD 1,20,748 91,554 99,245 10.3 10.7 10.5 10.2 7.9 7.4 4.6 1.6
Oil & Natural Gas Corp 88 85 BUY 11,12,097 7,24,611 8,06,427 7.5 8.2 12.3 11.2 4.8 4.3 5.1 3.7
Petronet LNG 237 282 BUY 3,55,500 3,68,147 3,60,683 19.8 22.2 13.5 12.0 7.5 6.7 27.5 24.3
Reliance Industries 1,843 2,475 BUY 1,16,84,541 57,72,759 65,51,428 87.5 109.1 21.1 16.9 10.1 7.8 9.3 9.9
Source: IDBI Capital Research
19UNION BUDGET 2021-22 - IMPACT POSITIVE
Power Sector: SEB reforms on the anvil
Measure Impact Stocks Impacted
To appoint multiple distribution Multiple discom will promote competition The move is positive for the power
companies (discom) for the supply of and bring efficiency in the operation of sector players like NTPC, PGCIL, NHPC
power to consumers. state owned discoms.
To launch reform base power Power sector has seen increase in the
distribution sector scheme, with an receivables. And thus discom scheme of
outlay of Rs3tn over 5 years. Rs3tn to improve CF of power sector
companies. But await clarity on the
timeline of instituting it.
Allocated Rs89bn (increase of 48% vs
FY21 RE) to power and renewable
sector under various schemes (IPDS,
DDUGJY etc).
Source: IDBI Capital Research
20UNION BUDGET 2021-22 - IMPACT
Capital Expenditure by PSU in Infra sector, PGCIL capex is lower in FY22E
Change
Rs bn Actual FY20 FY21 BE FY21 RE FY22 BE FY21 RE vs FY21 BE FY22 BE vs FY21 RE
NTPC 366 210 210 237 0% 13%
NHPC 25 53 52 81 -2% 54%
SJVN 13 29 29 50 0% 74%
PGCIL 153 105 105 75 0% -29%
Coal India 63 95 100 147 5% 47%
NLC 65 67 67 21 0% -69%
Capital Expenditure by Ministry of Road Transport and Highways to increase 16%
Change
Rs bn FY20 FY21 BE FY21E RE FY22E BE FY21 RE vs FY21 BE FY22 BE vs FY21 RE
Ministry of Road Transport and Highways 78,111 91,656 1,01,656 1,17,947 11% 16%
National Highways Authority of India 31,691 42,500 49,050 57,350 15% 17%
Road Works 46,292 48,759 52,358 60,241 7% 15%
Works Financed from PBFF 13 18 18 20 0% 10%
Research, Training and Studies 140
Research, Training, Studies 8 379 231 336 -39% 46%
Actual Recoveries -33
Source: Budget Documents
RE= Revised Estimate
BE= Budget Estimate
21UNION BUDGET 2021-22 - IMPACT
Key to Ratings Stocks:
BUY: Absolute return of 15% and above; ACCUMULATE: 5% to 15%; HOLD: Upto ±5%; REDUCE: -5% to -15%; SELL: -15% and below.
6th Floor, IDBI Tower, WTC Complex, Cufee Parade, Colaba, Mumbai – 400 005. Phones: (91-22) 2217 1700; Fax: (91-22) 2215 1787; Email: info@idbicapital.com
SEBI Registration: BSE & NSE (Cash & FO) – INZ000007237, NSDL – IN-DP-NSDL-12-96, Research – INH000002459, CIN – U65990MH1993GOI075578
Compliance Officer: Christina D’souza; Email: compliance@idbicapital.com; Telephone: (91-22) 2217 1907
Disclaimer
This report has been published by IDBI Capital Markets & Securities Ltd. (hereinafter referred to as “IDBI Capital”) for private circulation. This report should not be reproduced or copied or made
available to others. No person associated with IDBI Capital is obligated to call or initiate contact with you for the purposes of elaborating or following up on the information contained in this report. The
information contained herein is strictly confidential and meant for solely for the selected recipient and may not be altered in any way, transmitted to copied or distributed, in part or in whole, to any
other person or to the media or reproduced in any form, without the prior written consent of IDBI Capital.
Recipients may not receive this report at the same time as other recipients. IDBI Capital will not treat recipients as customers by virtue of their receiving this report.
The information contained herein is from the public domain or sources believed to be reliable, but we do not make any representation or warranty that it is accurate, complete or up-to-date and it
should not be relied upon as such. While reasonable care has been taken to ensure that information given is at the time believed to be fair and correct and opinions based thereupon are reasonable,
due to the very nature of research it cannot be warranted or represented that it is accurate or complete and it should not be relied upon as such. In so far as this report includes current or historical
information, it is believed to be reliable, although its accuracy and completeness cannot be guaranteed.
Opinions expressed are current opinions as of the date appearing on this material only. While we endeavor to update on a reasonable basis, the information discussed in this material, IDBI Capital, its
directors, employees are under no obligation to update or keep the information current. Further there may be regulatory, compliance, or other reasons that prevent us from doing so.
Prospective investors and others are cautioned that any forward-looking statements are not predictions and may be subject to change without notice.
IDBI Capital, its directors and employees and any person connected with it, will not in any way be responsible for the contents of this report or for any losses, costs, expenses, charges, including notional
losses/lost opportunities incurred by a recipient as a result of acting or non-acting on any information/material contained in the report.
This is not an offer to sell or a solicitation to buy any securities or an attempt to influence the opinion or behavior of investors or recipients or provide any investment/tax advice.
This report is for information only and has not been prepared based on specific investment objectives. The securities discussed in this report may not be suitable for all investors. Investors must make
their own investment decision based on their own investment objectives, goals and financial position and based on their own analysis.
Trading in stocks, stock derivatives, and other securities is inherently risky and the recipient agrees to assume complete and full responsibility for the outcomes of all trading decisions that the recipient
makes, including but not limited to loss of capital.
Opinions, projections and estimates in this report solely constitute the current judgment of the author of this report as of the date of this report and do not in any way reflect the views of IDBI Capital, its
directors, officers, or employees.
This report is not directed or intended for distribution to, or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction, where such
distribution, publication, availability or use would be contrary to law, regulation or which would subject IDBI Capital and associates to any registration or licensing requirement within such jurisdiction.
The securities described herein may or may not be eligible for sale in all jurisdictions or to certain category of investors. Persons in whose possession this report may come are required to inform
themselves of and to observe such restriction.
E-mail is not a secure method of communication. IDBI Capital cannot accept responsibility for the accuracy or completeness of any e-mail message or any attachment(s).
This transmission could contain viruses, be corrupted, destroyed, incomplete, intercepted, lost or arrived late. IDBI Capital, its directors or employees or associates accept no liability for any damage
caused, directly or indirectly, by this email
22UNION BUDGET 2021-22 - IMPACT
Analyst Disclosures
We, Research Team, hereby certify that the views expressed in this report accurately reflect our personal views about the subject companies and / or securities. We also certify that no part of our compensation were,
are or would be directly or indirectly related to the specific recommendations or views expressed in this report. Principally, we will be responsible for the preparation of this research report and have taken reasonable
care to achieve and maintain independence and objectivity in making any recommendations herein.
Other Disclosures
IDBI Capital Markets & Securities Ltd. (hereinafter referred to as “IDBI Capital”) was incorporated in the year 1993 under Companies Act, 1956 and is a wholly owned subsidiary of IDBI Bank Limited. IDBI Capital is one
of India’s leading securities firm which offers a full suite of products and services to individual, institutional and corporate clients namely Stock broking (Institutional and Retail) , Distribution of financial products,
Merchant Banking, Corporate Advisory Services, Debt Arranging & Underwriting, Portfolio Manager Services and providing Depository Services. IDBI Capital is a registered trading and clearing member of BSE Ltd. (BSE)
and National Stock Exchange of India Limited (NSE). IDBI Capital is also a SEBI registered Merchant Banker, Portfolio Manager and Research Analyst. IDBI Capital is also a SEBI registered depository participant with
National Securities Depository Limited (NSDL) and is also a Mutual Fund Advisor registered with Association of Mutual Funds in India (AMFI).
IDBI Capital and its associates IDBI Bank Ltd. (Holding Company), IDBI Intech Ltd. (Fellow Subsidiary), IDBI Asset Management Ltd. (Fellow Subsidiary) and IDBI Trusteeship Services Ltd. (Fellow Subsidiary).
IDBI Group is a full-serviced banking, integrated investment banking, investment management, brokerage and financing group. Details in respect of which are available on www.idbicapital.com IDBI Capital along with
its associates are leading underwriter of securities and participants in virtually all securities trading markets in India. We and our associates have investment banking and other business relationships with a significant
percentage of the companies covered by our Research Department. Investors should assume that IDBI Capital and/or its associates are seeking or will seek investment banking or other business from the company or
companies that are the subject of this material. IDBI Capital generally prohibits its analysts, persons reporting to analysts, and their dependent family members having a financial conflict of interest in the securities or
derivatives of any companies that the analysts cover. Additionally, IDBI Capital generally prohibits its analysts and persons reporting to analysts from serving as an officer, director, or advisory board member of any
companies that the analysts cover. Our sales people, traders, and other professionals may provide oral or written market commentary or trading strategies to our clients that reflect opinions that are contrary to the
opinions expressed herein, and our proprietary trading and investing businesses may make investment decisions that are inconsistent with the recommendations expressed herein. In reviewing these materials, you
should be aware that any or all of the foregoing, among other things, may give rise to real or potential conflicts of interest. Directors of IDBI Capital or its associates may have interest in the Companies under
recommendation in this report either as Director or shareholder. Additionally, other important information regarding our relationships with the company or companies that are the subject of this material is provided
herein. This material should not be construed as an offer to sell or the solicitation of an offer to buy any security in any jurisdiction where such an offer or solicitation would be illegal. We are not soliciting any action
based on this material. It is for the general information of clients of IDBI Capital. It does not constitute a personal recommendation or take into account the particular investment objectives, financial situations, or
needs of individual clients. Before acting on any advice or recommendation in this material, clients should consider whether it is suitable for their particular circumstances and, if necessary, seek professional advice.
The price and value of the investments referred to in this material and the income from them may go down as well as up, and investors may realize losses on any investments. Past performance is not a guide for
future performance, future returns are not guaranteed and a loss of original capital may occur. We and our associates, officers, directors, and employees, including persons involved in the preparation or issuance of
this material, may from time to time have “long” or “short” positions in, act as principal in, and buy or sell the securities or derivatives thereof of companies mentioned herein. For the purpose of calculating whether
IDBI Capital and its associates holds beneficially owns or controls, including the right to vote for directors, 1% of more of the equity shares of the subject issuer of a research report, the holdings does not include
accounts managed by IDBI Asset Management Company/ IDBI Mutual Fund.
IDBI Capital hereby declares that our activities were neither suspended nor we have materially defaulted with any Stock Exchange authority with whom we are registered in last five years. However SEBI, Exchanges
and Depositories have conducted the routine inspection and based on their observations have issued advice letters or levied minor penalty on IDBI Capital for certain operational deviations. We have not been
debarred from doing business by any Stock Exchange / SEBI or any other authorities; nor has our certificate of registration been cancelled by SEBI at any point of time. IDBI Capital, its directors or employees or
associates, may from time to time, have positions in, or options on, and buy and sell securities referred to herein. IDBI Capital or its associates, during the normal course of business, from time to time, may solicit from
or perform investment banking or other services for any company mentioned in this document or their connected persons or be engaged in any other transaction involving such securities and earn brokerage or other
compensation or act as a market maker in the financial instruments of the company(ies) discussed herein or their affiliate companies or act as advisor or lender / borrower to such company(ies)/associates companies
or have other potential conflict of interest. This report may provide hyperlinks to other websites. Except to the extent to which the report refers to the website of IDBI Capital, IDBI Capital states that it has not
reviewed the linked site and takes no responsibility for the content contained in such other websites. Accessing such websites shall be at recipient's own risk. IDBI Capital encourages the practice of giving independent
opinion in research report preparation by the analyst and thus strives to minimize the conflict in preparation of research report. Accordingly, neither IDBI Capital nor Research Analysts have any material conflict of
interest at the time of publication of this report. We offer our research services to primarily institutional investors and their employees, directors, fund managers, advisors who are registered with us. The Research
Analyst has not served as an officer, director or employee of Subject Company. We or our associates may have received compensation from the subject company in the past 12 months. We or our associates may have
managed or co-managed public offering of securities for the subject company in the past 12 months. We or our associates may have received compensation for investment banking or merchant banking or brokerage
services from the subject company in the past 12 months. We or our associates may have received any compensation for products or services other than investment banking or merchant banking or brokerage services
from the subject company in the past 12 months. We or our associates may have received any compensation or other benefits from the Subject Company or third party in connection with the research report.
Research Analyst or his/her relative’s may have financial interest in the subject company. IDBI Capital or its associates may have financial interest in the subject company. Research Analyst or his/her relatives does
not have actual/beneficial ownership of 1% or more securities of the subject company at the end of the month immediately preceding the date of publication of Research Report. IDBI Capital or its associates may
have actual/beneficial ownership of 1% or more securities of the subject company at the end of the month immediately preceding the date of publication of Research Report. The Subject Company may have been a
client during twelve months preceding the date of distribution of the research report. Price history of the daily closing price of the securities covered in this note is available at www.bseindia.com; www.nseindia.com
and www.economictimes.indiatimes.com/markets/stocks/stock-quotes.
23You can also read
