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Budget 2013: Sector expectations and likely impact on stocks
  • 
	A recent Macquaries report has assembled sector-wise expectations from Union Budget 2013. The report has analysed the outcome on individual sectors and companies within if expectations are met. Take a look...

    A recent Macquaries report has assembled sector-wise expectations from Union Budget 2013. The report has analysed the outcome on individual sectors and companies within if expectations are met. Take a look...

  • 
	Banking

	Expectation: To allow banks to float tax-free infrastructure bonds or other source of long term funding with tax incentive to address long term funding needs; issuing of Banking Licences.

	Probability of Outcome: Medium

	Impact on Sector: Positive for banks, as this has been a long standing demand and would address asset-liability mismatch. New Bank lincenses Negative for incumbent banks as it would increase competition.

    Banking Expectation: To allow banks to float tax-free infrastructure bonds or other source of long term funding with tax incentive to address long term funding needs; issuing of Banking Licences. Probability of Outcome: Medium Impact on Sector: Positive for banks, as this has been a long standing demand and would address asset-liability mismatch. New Bank lincenses Negative for incumbent banks as it would increase competition.

  • 
	Capital Goods

	Expectation: Extension of Levy of import duty on power transmission equipment

	Probability of Outcome: Medium

	Impact on Sector: If implemented, it would be positive for capital goods

	Impact on Companies:  Positive for all T&D based capital goods companies

    Capital Goods Expectation: Extension of Levy of import duty on power transmission equipment Probability of Outcome: Medium Impact on Sector: If implemented, it would be positive for capital goods Impact on Companies:  Positive for all T&D based capital goods companies

  • 
	Infrastructure

	Expectation: Re-introduction Increase of tax-deduction under section 80 CCF

	Probability of Outcome: Medium

	Impact on Sector: It would increase the debt availability in the sector

	Impact on Companies: Positive for Infra developers

    Infrastructure Expectation: Re-introduction Increase of tax-deduction under section 80 CCF Probability of Outcome: Medium Impact on Sector: It would increase the debt availability in the sector Impact on Companies: Positive for Infra developers

  • 
	Power

	Expectation: Extension of existing provision of 10-year tax holiday to 15-Years for Power plants and exempting power projects from service tax net

	Probability of Outcome: Low

	Impact on Sector: Generators to benefit

	Impact on Companies: All utilities

    Power Expectation: Extension of existing provision of 10-year tax holiday to 15-Years for Power plants and exempting power projects from service tax net Probability of Outcome: Low Impact on Sector: Generators to benefit Impact on Companies: All utilities

  • 
	Media

	Expectation: Lowering of import duty on Set-top boxes
	Probability of Outcome: Low
	Impact on Sector: Any cut would be sentimentally positive newsflow for DTH companies

	Impact on Companies: Positive for Dish TV, SUN TV

    Media Expectation: Lowering of import duty on Set-top boxes Probability of Outcome: Low Impact on Sector: Any cut would be sentimentally positive newsflow for DTH companies Impact on Companies: Positive for Dish TV, SUN TV

  • 
	Telecom

	Expectation: Incentives to telecom equipment manufacturers

	Probability of Outcome: Medium

	Impact on Sector: This would be an incentive to vendors to set up manufacturing base in India.

	Impact on Companies: Bharti, Idea, Rcom

    Telecom Expectation: Incentives to telecom equipment manufacturers Probability of Outcome: Medium Impact on Sector: This would be an incentive to vendors to set up manufacturing base in India. Impact on Companies: Bharti, Idea, Rcom

  • 
	Real Estate

	Expectation: Extension of exemption under section 80IA, Increase in tax rebate limit for interest and principal repayment for purchase of house for self-usage, Extension of 1% interest subvention on home loan and Re-introduction of tax holiday for affordable housing projects.

	Probability of Outcome: Low to medium

	Impact on Sector: Good for large housing projects, tax rebate positive for end-users and interest subvention postive for positive for low ticket size residential projects.

	Impact on Companies: DLF, Ansal, Omaxe, Sobha, Prestige, Oberoi, DLF, Godrej Properties, HDIL, Unitech, Ansal, Parsvnath, DLF, Unitech
	 

    Real Estate Expectation: Extension of exemption under section 80IA, Increase in tax rebate limit for interest and principal repayment for purchase of house for self-usage, Extension of 1% interest subvention on home loan and Re-introduction of tax holiday for affordable housing projects. Probability of Outcome: Low to medium Impact on Sector: Good for large housing projects, tax rebate positive for end-users and interest subvention postive for positive for low ticket size residential projects. Impact on Companies: DLF, Ansal, Omaxe, Sobha, Prestige, Oberoi, DLF, Godrej Properties, HDIL, Unitech, Ansal, Parsvnath, DLF, Unitech  

  • 
	Oil & Gas

	Expectation: Additional excise duty on diesel cars; Export parity on refined products vs trade parity currently

	Probability of Outcome: High; Medium

	Impact on Sector: Government to benefit fully, and OMCs partially since. Carmakers would be hurt

	Impact on Companies: Positive for MRPL, Chennai Petroleum. Mildly negative for RIL, Essar Oil.

    Oil & Gas Expectation: Additional excise duty on diesel cars; Export parity on refined products vs trade parity currently Probability of Outcome: High; Medium Impact on Sector: Government to benefit fully, and OMCs partially since. Carmakers would be hurt Impact on Companies: Positive for MRPL, Chennai Petroleum. Mildly negative for RIL, Essar Oil.

  • 
	Pharma & Healthcare

	Expectation: Currently a weighted tax deduction of 200 percent for R&D expenditure in an in-house facility is available. Industry is requesting for it to go up further (to 250-300%) and exemption being made available for expense in external R&D as well.

	Probability of Outcome: Medium

	Impact on Sector: Positive, as it would encourage higher spending on building new drug Pipeline, which is critical for the sector All Pharma

    Pharma & Healthcare Expectation: Currently a weighted tax deduction of 200 percent for R&D expenditure in an in-house facility is available. Industry is requesting for it to go up further (to 250-300%) and exemption being made available for expense in external R&D as well. Probability of Outcome: Medium Impact on Sector: Positive, as it would encourage higher spending on building new drug Pipeline, which is critical for the sector All Pharma

  • 
	Metal & Mining

	Expectation: Change in guidelines for dividend payout by PSUs, increasing it from current 20% of PAT/ equity; Continued divestments in FY14

	Probability of Outcome: High

	Impact on Sector: Given the budget deficit, chances guideline changes are high, so that government can reap special dividends; Large cap PSUs can benefit from increase in free float and liquidity.

	Impact on Companies: NMDC, COAL, SAIL

    Metal & Mining Expectation: Change in guidelines for dividend payout by PSUs, increasing it from current 20% of PAT/ equity; Continued divestments in FY14 Probability of Outcome: High Impact on Sector: Given the budget deficit, chances guideline changes are high, so that government can reap special dividends; Large cap PSUs can benefit from increase in free float and liquidity. Impact on Companies: NMDC, COAL, SAIL

  • 
	Auto

	Expectation: Marginal hike in excise duty; Duty on diesel vehicle

	Probability of Outcome: Low

	Impact on Sector: Given the weakness in auto industry sales, an excise duty hike is unlikely and a pass-through would further delay the demand recovery in the sector.

	Impact on Companies: Negative for Maruti Suzuki, Tata Motors, Mahindra and Mahindra, Bajaj Auto, Ashok Leyland

    Auto Expectation: Marginal hike in excise duty; Duty on diesel vehicle Probability of Outcome: Low Impact on Sector: Given the weakness in auto industry sales, an excise duty hike is unlikely and a pass-through would further delay the demand recovery in the sector. Impact on Companies: Negative for Maruti Suzuki, Tata Motors, Mahindra and Mahindra, Bajaj Auto, Ashok Leyland

  • 
	Cement

	Expectation: Increase in excise duty
	Probability of Outcome: Medium
	Impact on Sector: High prices in cement sector may see the government increase excise duty

	Impact on Companies: Negative for ACC, Grasim, Ultratech Cement Andhra Cement, India Cements

    Cement Expectation: Increase in excise duty Probability of Outcome: Medium Impact on Sector: High prices in cement sector may see the government increase excise duty Impact on Companies: Negative for ACC, Grasim, Ultratech Cement Andhra Cement, India Cements

  • 
	A recent Macquaries report has assembled sector-wise expectations from Union Budget 2013. The report has analysed the outcome on individual sectors and companies within if expectations are met. Take a look...
  • 
	Banking

	Expectation: To allow banks to float tax-free infrastructure bonds or other source of long term funding with tax incentive to address long term funding needs; issuing of Banking Licences.

	Probability of Outcome: Medium

	Impact on Sector: Positive for banks, as this has been a long standing demand and would address asset-liability mismatch. New Bank lincenses Negative for incumbent banks as it would increase competition.
  • 
	Capital Goods

	Expectation: Extension of Levy of import duty on power transmission equipment

	Probability of Outcome: Medium

	Impact on Sector: If implemented, it would be positive for capital goods

	Impact on Companies:  Positive for all T&D based capital goods companies
  • 
	Infrastructure

	Expectation: Re-introduction Increase of tax-deduction under section 80 CCF

	Probability of Outcome: Medium

	Impact on Sector: It would increase the debt availability in the sector

	Impact on Companies: Positive for Infra developers
  • 
	Power

	Expectation: Extension of existing provision of 10-year tax holiday to 15-Years for Power plants and exempting power projects from service tax net

	Probability of Outcome: Low

	Impact on Sector: Generators to benefit

	Impact on Companies: All utilities
  • 
	Media

	Expectation: Lowering of import duty on Set-top boxes
	Probability of Outcome: Low
	Impact on Sector: Any cut would be sentimentally positive newsflow for DTH companies

	Impact on Companies: Positive for Dish TV, SUN TV
  • 
	Telecom

	Expectation: Incentives to telecom equipment manufacturers

	Probability of Outcome: Medium

	Impact on Sector: This would be an incentive to vendors to set up manufacturing base in India.

	Impact on Companies: Bharti, Idea, Rcom
  • 
	Real Estate

	Expectation: Extension of exemption under section 80IA, Increase in tax rebate limit for interest and principal repayment for purchase of house for self-usage, Extension of 1% interest subvention on home loan and Re-introduction of tax holiday for affordable housing projects.

	Probability of Outcome: Low to medium

	Impact on Sector: Good for large housing projects, tax rebate positive for end-users and interest subvention postive for positive for low ticket size residential projects.

	Impact on Companies: DLF, Ansal, Omaxe, Sobha, Prestige, Oberoi, DLF, Godrej Properties, HDIL, Unitech, Ansal, Parsvnath, DLF, Unitech
	 
  • 
	Oil & Gas

	Expectation: Additional excise duty on diesel cars; Export parity on refined products vs trade parity currently

	Probability of Outcome: High; Medium

	Impact on Sector: Government to benefit fully, and OMCs partially since. Carmakers would be hurt

	Impact on Companies: Positive for MRPL, Chennai Petroleum. Mildly negative for RIL, Essar Oil.
  • 
	Pharma & Healthcare

	Expectation: Currently a weighted tax deduction of 200 percent for R&D expenditure in an in-house facility is available. Industry is requesting for it to go up further (to 250-300%) and exemption being made available for expense in external R&D as well.

	Probability of Outcome: Medium

	Impact on Sector: Positive, as it would encourage higher spending on building new drug Pipeline, which is critical for the sector All Pharma
  • 
	Metal & Mining

	Expectation: Change in guidelines for dividend payout by PSUs, increasing it from current 20% of PAT/ equity; Continued divestments in FY14

	Probability of Outcome: High

	Impact on Sector: Given the budget deficit, chances guideline changes are high, so that government can reap special dividends; Large cap PSUs can benefit from increase in free float and liquidity.

	Impact on Companies: NMDC, COAL, SAIL
  • 
	Auto

	Expectation: Marginal hike in excise duty; Duty on diesel vehicle

	Probability of Outcome: Low

	Impact on Sector: Given the weakness in auto industry sales, an excise duty hike is unlikely and a pass-through would further delay the demand recovery in the sector.

	Impact on Companies: Negative for Maruti Suzuki, Tata Motors, Mahindra and Mahindra, Bajaj Auto, Ashok Leyland
  • 
	Cement

	Expectation: Increase in excise duty
	Probability of Outcome: Medium
	Impact on Sector: High prices in cement sector may see the government increase excise duty

	Impact on Companies: Negative for ACC, Grasim, Ultratech Cement Andhra Cement, India Cements

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