A Vote Stock Ideas -of-Account-Budget sets the Narrative of “Viksit Bharat”
Our honourable Finance Minister Nirmala Sitaraman presented the Interim Budget 2024-25 today. Being the “vote of account” budget before the Union Election 2024, the expectations of the budget were naturally low. The finance minister delivered along the expected lines with an emphasis on the continuation of higher capital expenditure on top of the medium-term flavour of populism. We believe that the Budget has proactively set the tone for economic development in the upcoming years. It envisions a “Viksit Bharat” by 2047, following a transformation similar to the one witnessed in the last decade. The market borrowing is projected to be ~11.75 Lc Cr for FY25, and the bond market responded positively to this budgeted figure. However, there were no major announcements related to the market, making it a relatively muted event from a market perspective. Investors will need to adopt a wait and-watch approach until Jul’24 when the full-fledged budget will be presented after the formation of the new government.
Our key takeaways from the Interim Budget are as follows:
Fiscal Math Reasonable: Nominal GDP growth for FY25 is set at Rs 327.7 Lc Cr, indicating a robust growth of 10.5% over the FY24 revised figure of Rs 296.6 Lc Cr. The government has successfully achieved the Fiscal Deficit target of 5.8% for FY24, surpassing the budgeted estimate of 5.9%. Additionally, it has set a fiscal deficit target of 5.1% for FY25. Keeping this in view, the market borrowing is projected to be ~11.75 Lc Cr for FY25. As expected, the bond market has responded positively to this budgeted number.
Significant positive for infrastructure: The government’s capital expenditure will grow to Rs 11.1 Lc Cr, reflecting an encouraging growth of 11.1% in FY25 over the FY24 figure.
Its unwavering focus on Roads, Power, Urban Development, and Railways will create key long-term economic multipliers. In a significant development for the railways, the government has announced higher capital outlays of 2.55 Lc Cr for the segment, which will notably boost railway infrastructure moving forward. Moreover, the conversion of the existing 40,000 bogies to Vande Bharat standards under the Pradhan Mantri Gatishakti scheme will greatly enhance the efficiency and modernization of the railway infrastructure in the country.
Enhanced allocation to the PM Awas Yojana: Allocation under the PM Awas Yojana will focus on building 20 Mn houses in the next five years, up 50% vs. the revised 2023-2024 budget.
Rooftop solarization (Suryodaya Yojna): 1 Cr households will be enabled to obtain up to 300 units of free electricity every month. This initiative is expected to result in savings of up to Rs 15,000 to 18,000 annually for households through free solar electricity and selling the surplus to distribution companies.
Boost to Nano DAP and Aquaculture Production: After the successful adoption of Nano Urea, the application of Nano DAP on various crops will be expanded in all agro-climatic zones. Moreover, the government also plans to set up a separate Department for Fisheries after realizing the importance of assisting fishermen. The implementation of the Pradhan Mantri Matsya Sampada Yojana (PMMSY) will be stepped up to enhance aquaculture productivity from the existing 3 to 5 tons per hectare, double exports to Rs 1 Lc Cr, and generate 55 Lc employment opportunities in the distant future. It will also set up five integrated aqua parks to further its aquaculture objectives.
Our Positive Budget Plays (Coverage): SBI, Bank of Baroda, Ultratech cement, Nestle, Britannia, Amber Enterprises, Praj Industries, PNC Infra, Ahluwalia Contracts (Non Coverage): Jindal Stainless, Tata Power, Waaree Renewables, Coromandel International
Our Positive Budget Plays (Coverage): SBI, Bank of Baroda, Ultratech cement, Nestle, Britannia, Amber Enterprises, Praj Industries, PNC Infra, Ahluwalia Contracts (Non Coverage): Jindal Stainless, Tata Power, Waaree Renewables, Coromandel International
Click here to download UNION BUDGET 2024-25 by Axis Securities
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