A detailed overview of the Union Budget 2019 by Axis Direct

1. 05 JUL 2019

2.  The 2019 general budget ended up as just another event without any big bang announcement to drive the economic engine as
was widely expected. Continuing with the borrowing target set up in the interim budget, the Government intends to tread on path
of fiscal prudence with deficit of 3% targeted to be reached by FY21 & FY22, thus fortifying the economic health along with
building up confidence of international investors in long run.
 Taking the cues from the Economic survey presented, the FM has taken a bold step of diversifying the debt on the books by raising
the share of sovereign external debt in external currencies which has primarily cheered the debt market as it would help reduce
crowding out of the private borrowing and help reduce cost of funds, the much needed helpline for India Inc. in these days of tight
liquidity in the debt markets. The 10 year bond yields have dropped around 6.69% post the announcement of raising the
government borrowings through sovereign bond route.
 Building on the cues from the Economic Survey, the FM has laid down stress on the economy driven by virtuous cycle of investment
to reach the coveted $5 trillion mark over next 5 years. Infrastructure investments in transportation, housing, improving ease of
living and industrial developments would kick start the economic engine. Additional resources (beyond budget allocation) required
for infrastructure creation would be made available through re-cycling of the existing assets as pointed out in the Economic Survey
report.
 FM has asked SEBI to consider raising the minimum public shareholding from current threshold of 25% to 35% in the listed
companies; this would lead to offloading of promoter stake as and when the regulation is announced. This development will have
an overhang for the companies with over 65% promoter shareholding leading to price volatility.
 Overall, the budget has become just another event in the slew of measures to be taken by the government to re-ignite the
economic engine and lot more things are likely to happen outside the budget as time passes.
Union Budget Highlights

3. 3
Key Sectoral Impact
Sector Key Budget Measures Impact
 Auto  Changes in customs duty for auto parts
 Road Infrastructure Cess of Rs 1/litre
 Incentive for purchase of EVs: Deduction of an amount
upto Rs. 1.5 lakh for interest paid on loan (to be taken
on or before 31st March, 2023) taken for purchase of
electric vehicle
 Positive for domestic auto ancillaries
producing the equipments in India; Auto
ancillary companies like Minda Ind.s, Minda
Corp, Lumax Ind.s
 Negative for Auto industry in general
 Negative for Auto OEM industry in general
 Real Estate  Additional deduction of Rs 1.5 lakh on loan for
purchase of home upto Rs 45 lakh. This shall be in
addition to existing interest deduction of Rs 2 lakh
 Positive for domestic Real Estate companies,
HFCs
 Infrastructure  Announced investment of Rs 100 lakh crore in
infrastructure over the next five years
 Proposed to set up expert committee for financing
options
 FPIs allowed to subscribe to listed debt securities
issued by ReITs and InvITs
 Positive for Infra companies like L&T,
Siemens, Cummins, IRB infra, Dilip Buildcon,
PNC Infra, HG Infra
 Positive for Cement companies like Ultratech,
JK cement, ACC, Shree Cement, India
Cement, Ambuja
UNION BUDGET FY19-20
05 JUL 2019

4. 4
Key Sectoral Impact
Sector Key Budget Measures Impact
 Railways &
Metro
 Announced need for investment of Rs 50 lakh crore in
railway infrastructure between 2018-30
 Proposal for Public-Private Partnership to meet the
expected capital outlay of Rs 1.4-1.6 lakh crore p.a.
in railways infrastructure
 Railway station modernization programme will be
launched this year
 Railways to be encouraged to invest more in suburban
rail network via special purpose vehicles (SPVs) and
enhance metro rail network
 Railway ministry is in the process of completing the
ambitious dedicated freight corridor (DFC)
 Demand is expected to surge for railways
engineering companies
 Positive for companies like RITES, KEC
International, Timken India, BEML, ABB India,
Siemens, JKIL, L&T, Kalpataru Power
 Roads, Airports
& Ports
 Plans to restructure the national highways programme
to create network of highways grid of a desirable
capacity for better connectivity
 Bharatmala phase 2 to be launched to develop State
road networks
 Envisions using rivers for cargo transportation to
decongest roads and railways
 ‘Jal Marg Vikas’ project and ‘Sagarmala’ initiatives to
improve logistics and reduce transportation cost
 Set an investment target of Rs 80,250 crore for
phase 3 of the Pradhan Mantri Gram Sadak Yojana to
build 1,25,000 km of rural roads
 Positive for companies like L&T, KNR Infra,
Sadbhav Engg.
UNION BUDGET FY19-20
05 JUL 2019

5. 5
Key Sectoral Impact
Sector Key Budget Measures Impact
 Power  Proposes ‘One Nation, One Grid’ to ensure power
availability to states at affordable rates
 A package of power sector tariff and structural
reforms would soon be announced
 Performance of Ujjwal DISCOM Assurance Yojana
(UDAY) introduced in 2015 is examined for the scope
of improvement
 Positive for companies like NTPC, NHPC,
Adani Power, PGCIL, Tata Power
 Telecom
Infrastructure
 BharatNet to be speeded up; the government would
dip into the Universal Services Obligation Fund
(USOF) corpus to enable BharatNet to boost rural
broadband penetration
 This will create huge spending for Telecom
infrastructure
 Positive for companies like Sterlite
Technologies
 Cement  Proposed to launch second phase of Pradhan Mantri
Awas Yojana – Gramin (PMAY-G) with aim to build
1.95Cr houses over 2019-22
 Average number of days of construction to houses has
reduced from 314days in 2015-16 to 114days in
2017-18 will enhance volume growth for cement
companies
 PMAY-G allocation at Rs. 25,853 Cr.
 Increased allocation in Pradhan Mantri Gram Sadak
Yojana (PMGSY) by 22.6% to Rs19,000Cr
 Positive for companies like Ultratech,
JK cement, ACC, Shree Cement, India
Cement, Ambuja
UNION BUDGET FY19-20
05 JUL 2019

6. 6
Key Sectoral Impact
Sector Key budget measures Impact
 Banks  Rs 70,000cr allotted for PSU Bank recapitalisation
 Tax Incentives for resolution of distressed companies
under NCLT
 While the earlier budgeted recap was
~Rs 40,000-50,000cr for FY19-20, the move
is largely in-line with market expectations. This
will bolster capital base of PSU Banks to
comply with RBI capital requirement guidelines
and aid them in better credit growth
 Positive for companies like Most PSU Banks
viz. Bank of Baroda, Union Bank etc.
 Encouraging resolution under NCLT will help
speedy recovery of distressed loans
 Positive for companies like Most corporate
skewed banks including SBI, ICICI Bank, etc.
 NBFCs  To provide one-time 6-months partial credit guarantee
for public sector banks, for the purchase of pooled
assets of financially sound NBFCs
 To provide greater parity in tax treatment for NBFCs
vis-à-vis banks, interest on certain bad or doubtful
debts by deposit taking as well as systemically
important non-deposit taking NBFCs to be taxed in
the year in which interest is actually received
 More powers to RBI to regulate NBFCs
 This will be a boost for overall NBFCs
currently facing tough liquidity environment
 Empowering RBI will provide stability over the
long-term
 Positive for companies like Bajaj Finance,
Cholamandalam Investment, Shriram
Transport, Sundaram Finance etc.
UNION BUDGET FY19-20
05 JUL 2019

7. 7
Key Sectoral Impact
Sector Key budget measures Impact
 Housing Finance  Proposal to move regulation of HFCs from National
Housing Board to RBI
 Increase the interest deduction by Rs 1.5 lac to Rs 3.5
lac per annum on loans for houses valued up to Rs 45
lac. The deduction is available on loans taken up to
March 31, 2020.
 RBI as a regulatory board for HFCs will help
in improving stability in the sector over the
long term.
 Positive for companies like HDFC, LIC Housing
Finance etc.
 Increased interest deduction in affordable
housing segment will help improve demand.
 Positive for companies like Aavas Financiers,
Can Fin Homes
 IT  Government will try to improve the skills of our youth
in areas such as Artificial Intelligence, Big Data,
Robotics, etc
 Encouragement to MRO (Maintenance, repair and
Overhaul)
 This will create good opportunities for the IT
Services as demand for AI, Cloud is
increasing with high momentum
 Positive for companies like TCS, Infosys, HCL
technologies, Zensar, Tech Mahindra
 Encouragement to MRO will help Cyient to get
better business opportunities
 Consumer
Durables
 Increase in Customs Duty on indoor & outdoor unit of
split AC’s from 15% to 20%
 Positive: Amber Enterprises (Promotes Make in
India)
 Marginally negative for OEMs
UNION BUDGET FY19-20
05 JUL 2019

8. 8
Key Sectoral Impact
Sector Key Budget Measures Impact
 Tobacco &
Cigarettes
 Hike in Basic Excise Duty on filter cigarettes of varying
length from NIL to Rs. 5/1,000 sticks and Rs.
10/1,000 sticks for cigarettes with length of more
than 75mm
 Marginally Negative for companies like ITC,
Godfrey Phillips
 Jewellery &
Other Precious
Metals
 Increase custom duty on gold and other precious
metals from 10% currently to 12.5% going forward
 Negative for Jewellery companies like Titan,
PC Jewellers, Thangamaiyl Jewellery, TBZ
 Aviation  Opening up of FDI in aviation  Positive for companies like Spice Jet, Indigo
 Piped Water  Piped water across Indian Households by 2024
under ‘Har Ghar Jal’
 Focus on managing nation’s scattered water resources
 Administration under Water Power Ministry
 Positive for companies like Shakti Pumps, VA
Tech Wabag, Finolex Industries, Astral
Polytech, Supreme Industries
UNION BUDGET FY19-20
05 JUL 2019

9. 9
Key Sectoral Impact
Sector Key Budget Measures Impact
 Retail  Additional deduction of up to Rs. 1.5 lakhs for interest
on home loans
 Electrification of 1.95 crore houses by 2022 &
schemes like BharatNet project to bridge the rural –
urban gap (to increase the standard of living and
brand awareness)
 Local sourcing norms to be eased for single brand
retail FDIs
 Positive for Aditya Birla Fashion & Retail,
Future Lifestyle Fashions, Arvind Fashions,
Shoppers Stop, Trent, V-Mart, Future Retail,
Avenue Supermarts, Spencers Retail
 Negative for Domestic Branded Apparel
Companies
 Others  Increase in public shareholding proposed from 25% to
35%
 Company coming up with Share Buyback proposal
will have to pay 20% tax
 Negative for companies with promoter
shareholding more than 75%
 Deters companies with excess cash chest on
their books from undertaking Buyback
programs
UNION BUDGET FY19-20
05 JUL 2019

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UNION BUDGET FY19-20
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05 JUL 2019

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05 JUL 2019
UNION BUDGET FY19-20