In anticipation of the Union Budget 2024–25, Axis Securities has provided a detailed outlook on key sectors and expectations, encompassing higher capital expenditures, increased rural spending, and fiscal consolidation. The brokerage identifies several sectors poised to benefit from the upcoming budgetary allocations.
Power, Utilities, and Renewables are anticipated to receive additional support, with a particular focus on companies in the Railway, Infrastructure, and Capital Goods sectors. The brokerage foresees positive impacts on FMCG and Autos driven by augmented rural spending.
In the realm of electric vehicles (EVs) and manufacturing, Axis Securities recommends providing Production-Linked Incentive (PLI) incentives to battery producers and players in the electric power manufacturing and storage industry, aligning with the burgeoning EV market.
The Banking, Financial Services, and Insurance (BFSI) sector is expected to witness a further 10%–15% growth in government capital expenditures in FY25, building upon the ambitious ₹10 Lc Cr capex target set for the preceding fiscal year.
Public infrastructure development, spanning roads, water, metro, trains, defence, digital infrastructure, and green technologies, is anticipated to retain its status as a top priority. The brokerage sees these initiatives as advantageous for achieving double-digit credit growth in the banking industry.
Key Sector to watch ahead of Budget 2024
Cement sector
Axis Securities predicts a surge in demand fueled by the government’s heightened emphasis on infrastructure projects. The infrastructure sector is projected to experience a 15% YoY increase in total capital spending, benefiting companies like UltraTech, ACC, Dalmia Bharat Ltd, JK Cement, JK Lakshmi, and Star Cement.
Infrastructure Sector
Companies operating in the infrastructure sector are poised for significant growth, given the government’s intensified focus on nationwide infrastructure development, particularly in highways, railroads, and urban infrastructure.
The companies identified as beneficiaries by the brokerage include Ahluwalia Contracts, KNR Constructions, PNC Infratech, RITES, and KEC International.
Utilities, Power, and Power Ancillaries
The brokerage highlights the positive impact of the Suryodaya Yojna on the entire rooftop solar value chain. Encompassing solar cells, solar glass, solar modules, solar panels, solar batteries, solar energy plant controllers, transformers, power cables, chemicals, and power financiers, this initiative is expected to benefit companies such as Tata Power, KPI Green, Borosil Renewables, Adani Green, NTPC, NHPC, Waree Renewable, and Gensol Engineering.
Capital Goods, Consumer Durables, and Wires & Cables
In the realm of capital goods, the industry anticipates substantial capital expenditure estimates for railway infrastructure and infrastructural upgrades in the Union Budget 2024–25. Additionally, the brokerage foresees a significant government program supporting regional electronics production. Industry participants advocate for a reduced GST rate, aiming for 5% instead of the current 12%.
Key beneficiaries, as per the brokerage, include Polycab India Ltd., Dixon Technologies, and Amber Enterprises.
Pharma & Healthcare
According to the brokerage, the pharmaceutical sector expects a notable increase in the budgetary allocation for the Promotion of Research & Innovation Programme (PRIP). Building on the commendable measures taken in the previous year’s budget to encourage innovation, wherein the government allotted Rs 5,000 crore.
Companies like Lupin, Cipla, Sun Pharma, Healthcare Global Enterprises, and KIMS are anticipated to derive substantial benefits from this initiative.