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9 Sectors And Their Respective Stocks To Be In Focus Post Budget 2022: ICICI Direct Budget Review
In its Budget 2022-23 E review by brokerage firm ICICI Direct which it calls as Accelerating capex for mission $5 trillion, the brokerage says that this year's Budget can be aptly termed as adoption of a new growth template led by vital capex allocation to drive the economy.
Outlay of capital expenditure of ~ approximately 7.5 lakh crore, up ~35% YoY (at 2.9% of GDP), coupled with expanding the scope of private capex through PLI for new age segments, is expected to deliver inclusive growth, job creation and welfare for all.
Among infrastructure segment, major emphasis has been placed towards highways (capex allocation up ~55% YoY) and water (allocation at Rs. 60000 crore,up ~33% YoY in the "Har Ghar Jal se Nal" scheme). With the dual objective of growth and welfare, the Budget has hit the right chords in the current macroeconomic setup.
While the report has been an extensive one with stress on the key highlights as below:
Fiscal deficit target for FY22RE and FY23BE has been pegged at 6.9% (vs. 6.8% BE) and 6.4%, respectively. While optically it looks higher, we believe the government has adopted a "pragmatic but conservative" approach in setting this target, in our view. Nominal GDP growth for FY23RE has been pegged at 11.1% given that the pandemic is still not over.
Direct tax revenue growth of 13.6% for FY23E is in tandem with the nominal GDP growth (11.1%) estimated for FY23E. Current monthly GST collection of | 1.21 lakh crore is already running ahead of revised estimates for FY22E (i.e. | 1.13 lakh crore).We expect FY23E monthly GST target of | 1.3 lakh crore to be easily achievable.
Capex on fast lane:
The government is driving capex on the fast lane. Capex allocation has grown by 35% YoY to | 7.5 lakh crore or 2.9% of GDP (highest ever print).
This is on a higher base of FY22E and the heartening statistic is that FY22 revised estimates had no slippages. Capex to GDP ratio has significantly increased from 1.5% in FY18 to 2.9% in FY23BE. Increased support of Rs. 100000 crore to states would augment capex expenditure will also accelerate state level capex intensity.
Quality expenditure minus populism:
With removal of extra expenditure like social security expenses to tackle the pandemic, allocation for funds for Air India, etc, the share of revenue expenditure has been reduced to 81% of total expenditure for FY23E. Also, total subsidy bill has been contained at 1.2% of GDP, leaving more fiscal space for capital expenditure in FY23E
Disinvestment target for FY22RE revised downward to Rs.78,000 core (including LIC IPO) vs. earlier budgeted target of Rs. 175000 crore. For FY23E,it is pegged at Rs 65,000 crore, which looks realistic, in our view.
9 Sectors and individual stocks to be in focus
| Measures for fy22-23E | |||
|---|---|---|---|
| Stocks to be impacted | |||
| • 4 Multimodal Logistics parks through PPPto be awarded in 2022-23 | Logistics | MMLPs alstrategic locat ons wouldrationaliselogistics | AdaniPorts,Concor,TCI,Mahindra |
| • National Master Planaimed at world class modem infrastructure andlogistics synergy | oosts and improve competitiveness. tts directly connected to various modes of transport (air,roadand rail) and comprises warehouses, coldstorage, inter | Logi'Stics,TCIExpress, BlueOart | |
| • 100 PM Gati Shakti Cargo Terminals to be developed in neext threeyears | modal transfer of containersand bulk cargo | ||
| Custom duty on cut and polished diamonds reduced from 7 5°/o to 5% | jewellery | Reduction in custom duty on cut and polished diamonds | Titan Company |
| 400 new generation Vande Bharat trains will be developed and manufactured | Stainless steel | This step is positive for-players supplyingstainles.s steel | JindalStainless, Jindal Stainless |
| during the next 3 years. | for train coach body | ||
| The government has continued the support to rural economy with Rs. 73000 | |||
| crore spend through MGNAREGA. Further,the govemment has also continued allocation towards agriculture economy similar to last budget. | FMCG | This would help in revive the rural consumption levels, | HUL, Dabur, Marico and ITC |
| which has been adversely impacted by Covid related disruption | |||
| In respect to tobacco companies, there hasbeen nochange in excise duty on | Tobacco | Stable taxationon cigarettes would aidvolume growth | ITC, VST Industries |
| cigarettes | for Cigarette companies | ||
| Robust allocation of t 7.5lakh crore (up 35% YoY) as capital expenditure for | Domestic auto | Robust allocation towards capital expenditure and measures to spur private capex bodes well for domestic commercial vehicle industry. | Ashok Leyland,M&M,Tata Motors |
| FY23E & Concessional tax rate for new manufacturing set-ups at the rate of 15'Yo is extended by 1 year | |||
| Government has proposed to come out with Battery Swapping Policy which | EV | This will further accelerate EV adoption domestically with | Tata Motors, Cotton Greaves, Gabriel,Minda |
| also includes the concept of energy/battery as a service.In addition to it, the Government has substantially increased alocation to FAME scheme at t 2,908 crore for FY23E vs.t 800 crore for FY22E | robust allocation for FAME scheme | ||
| Most important announcement for banking sector las been the focus on | BFSI | Credit requirement from industry is expected to boost credit growth from banks | SBI ,Hdfc bank,large banks |
| Focus on affordable housing segment continues with allocation of 48000 | BFSI | The impetus bodes well for growth of unsecured portfolio | Canfin Home, HDFC, Home First Finance |
| crore for PM housing scheme |
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