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Union Budget 2017: Stocks to look out for!

07 Aug 2019 Nutan Gupta

With less than a week left for the Union Budget to be announced, there is a lot of curiosity related to the impact it will have on stocks. The government is likely to announce a reduction in the corporate tax rate, which is a positive sign for companies. Here are five stocks that one can consider investing in ahead of the Union Budget 2017.

Power Grid Corporation of India Limited

Power Grid Corporation of India is a Navratna company which owns and operates ~45% of India’s power transmission network. Revenues of the company are expected to grow 17% YoY in FY17E. The project execution momentum is also expected to sustain beyond FY17E, given a strong pipeline of projects worth Rs. 1.44 lakh crore that are likely to commission over the next 4-5 years. PGCIL is expected to show an earnings growth of 20% over FY16-19.

Budget Impact: The power sector is all set to witness revival on account of government support to increase availability of power. Power Grid Corporation of India will be one of the beneficiaries in the power sector.

DHFL

Dewan Housing Finance Corporation is one of India’s largest housing finance companies. It largely caters to the self-employed segment (40% of total AUM) and has around 353 branches. It generates revenue from interest earnings on housing loans. The company recently issued NCDs worth ~Rs.10,000 crore which are expected to reduce cost of funds by 40bps over FY16-18E. The management plans to channelize these funds to Affordable Housing schemes in Tier II/III cities. The company is likely to witness earnings growth of 24% over FY16-18E.

Budget Impact: The government is expected to increase the tax deduction limit for housing loans which is Rs. 2 lakh currently. This will encourage more people to buy houses. DHFL will be a major beneficiary of this announcement.

NTPC

NTPC, a Maharatna company, is the largest energy conglomerate in India with a capacity of 47,228 MW. NTPC is one of the most efficient players as it has 18% of national capacity but generates 24% of the power consumed. Out of 10 captive coal mines allocated by the Central Government, in phase 1, NTPC is developing 5 coal blocks which are 30-35% of NTPC’s current coal consumption. This will bring down generation cost and improve plant load factor. Company’s superior operational efficiencies (FY16 PLF of 79% against the industry average of 62%) give it a competitive edge. It also benefits from proximity to coal mines and lower fuel costs. The company is expected show a earnings growth of 8% over FY17-19E on account of improved operational performance.

Budget Impact: The government is expected to provide clarity in a positive way on the extension of 80 IA holidays for atleast 2 years. Moreover, domestic energy producers will benefit from government’s focus on energy supply to support the infra-sector.

Hindustan Petroleum Corporation Ltd

HPCL, a Navratna company, is a leading oil and gas refining and marketing company in India. It operates two major refineries producing a wide range of petroleum fuels in Mumbai and Visakhapatnam. The rising crude oil supplies will increase discounts being offered to the refineries, thereby adding to the refining margins. HPCL is expected to be a major beneficiary from this. The company is likely to witness earnings growth of 15-18% through FY17-19.

Budget Impact: The government may cut the excise duty in this budget, given the rise in crude oil prices. HPCL will be a major beneficiary if this announcement comes.

CESC

CESC is a RPG Goenka Group company with presence in generation and distribution of power. CESC has received transmission access for the Noida PPA. It has received transmission access of almost 170 MW which will be operational from April 2017. Lower fuel costs and efficient energy sourcing from Haldia plant will improve the company’s margins. The company is likely to witness 26% earnings growth in the next two years.

Budget Impact: The power sector is all set to witness revival due to government support in order to increase availability of power. CESC will be one of the beneficiaries in this space.

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Union Budget 2017: Stocks to look out for!

07 Aug 2019 Nutan Gupta

With less than a week left for the Union Budget to be announced, there is a lot of curiosity related to the impact it will have on stocks. The government is likely to announce a reduction in the corporate tax rate, which is a positive sign for companies. Here are five stocks that one can consider investing in ahead of the Union Budget 2017.

Power Grid Corporation of India Limited

Power Grid Corporation of India is a Navratna company which owns and operates ~45% of India’s power transmission network. Revenues of the company are expected to grow 17% YoY in FY17E. The project execution momentum is also expected to sustain beyond FY17E, given a strong pipeline of projects worth Rs. 1.44 lakh crore that are likely to commission over the next 4-5 years. PGCIL is expected to show an earnings growth of 20% over FY16-19.

Budget Impact: The power sector is all set to witness revival on account of government support to increase availability of power. Power Grid Corporation of India will be one of the beneficiaries in the power sector.

DHFL

Dewan Housing Finance Corporation is one of India’s largest housing finance companies. It largely caters to the self-employed segment (40% of total AUM) and has around 353 branches. It generates revenue from interest earnings on housing loans. The company recently issued NCDs worth ~Rs.10,000 crore which are expected to reduce cost of funds by 40bps over FY16-18E. The management plans to channelize these funds to Affordable Housing schemes in Tier II/III cities. The company is likely to witness earnings growth of 24% over FY16-18E.

Budget Impact: The government is expected to increase the tax deduction limit for housing loans which is Rs. 2 lakh currently. This will encourage more people to buy houses. DHFL will be a major beneficiary of this announcement.

NTPC

NTPC, a Maharatna company, is the largest energy conglomerate in India with a capacity of 47,228 MW. NTPC is one of the most efficient players as it has 18% of national capacity but generates 24% of the power consumed. Out of 10 captive coal mines allocated by the Central Government, in phase 1, NTPC is developing 5 coal blocks which are 30-35% of NTPC’s current coal consumption. This will bring down generation cost and improve plant load factor. Company’s superior operational efficiencies (FY16 PLF of 79% against the industry average of 62%) give it a competitive edge. It also benefits from proximity to coal mines and lower fuel costs. The company is expected show a earnings growth of 8% over FY17-19E on account of improved operational performance.

Budget Impact: The government is expected to provide clarity in a positive way on the extension of 80 IA holidays for atleast 2 years. Moreover, domestic energy producers will benefit from government’s focus on energy supply to support the infra-sector.

Hindustan Petroleum Corporation Ltd

HPCL, a Navratna company, is a leading oil and gas refining and marketing company in India. It operates two major refineries producing a wide range of petroleum fuels in Mumbai and Visakhapatnam. The rising crude oil supplies will increase discounts being offered to the refineries, thereby adding to the refining margins. HPCL is expected to be a major beneficiary from this. The company is likely to witness earnings growth of 15-18% through FY17-19.

Budget Impact: The government may cut the excise duty in this budget, given the rise in crude oil prices. HPCL will be a major beneficiary if this announcement comes.

CESC

CESC is a RPG Goenka Group company with presence in generation and distribution of power. CESC has received transmission access for the Noida PPA. It has received transmission access of almost 170 MW which will be operational from April 2017. Lower fuel costs and efficient energy sourcing from Haldia plant will improve the company’s margins. The company is likely to witness 26% earnings growth in the next two years.

Budget Impact: The power sector is all set to witness revival due to government support in order to increase availability of power. CESC will be one of the beneficiaries in this space.