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Union Budget 2012-13 SECTOR: Agro-chemicals Dhanuka Agritech CMP: Rs 83 Target Price: Rs 113 sVisit
Union Budget 2012-13
SECTOR: Agro-chemicals
Dhanuka Agritech
CMP: Rs 83
Target Price: Rs 113
sVisit Note NotesVisit

Announcement:

Excise Duty has been increased from 10% to 12%Target Price: Rs 113 sVisit Note NotesVisit Announcement: Rating: BUY Impact: It is a negative development

Rating: BUY

Impact:

It is a negative development as it will increase the cost of raw materials for the company and in current competitive scenario it would be difficult for the company to pass on the entire incremental burden. We have reduced our FY13E earnings by 3.3%.

PI Industries

Announcement:

CMP: Rs 520

Target Price: Rs 635

Excise Duty has been increased from 10% to 12%PI Industries Announcement: CMP: Rs 520 Target Price: Rs 635 Rating: BUY Impact: It is a

Rating: BUY

Impact:

It is a negative development as it will increase the cost of raw materials for the company and in current competitive scenario it would be difficult for the company to pass on the entire incremental burden. However, the impact on PI industries would be less than other agri-input companies as it draws ~40% export revenues from Custom synthesis which is immune from excise duty. The impact of above development is reduction of 1.7% on FY13E earnings

SECTOR: Auto

Maruti Suzuki

Announcement:

CMP: Rs 1373

Increase in Excise duty from 10% to 12%SECTOR : Auto Maruti Suzuki Announcement: CMP: Rs 1373 Target Price: Rs 1333 Rating: Book Profit

Target Price: Rs 1333

Rating: Book Profit

Segment

Current Excise (%)

New excise (%)

Cars (< 1500 cc , < 4 meters in Length)

10

12

Cars (< 1500 cc , >4 meters in Length)

22

24

Cars (> 1500 cc , >4 meters in Length)

22 + Rs 15,000

27

No additional excise duty on diesel passenger cars.1500 cc , >4 meters in Length) 22 + Rs 15,000 27 Proposal to extend weighted

Proposal to extend weighted deduction of 200% for R&D expenditure in an in house facility for a further period of 5 years beyond March 31, 2012.27 No additional excise duty on diesel passenger cars. Impact: The company has announced that it

Impact:

The company has announced that it will pass on the increase in excise duties to the end consumers.a further period of 5 years beyond March 31, 2012. Impact: Increase in excise duty will

Increase in excise duty will marginally impact the sales of the company and thereby the margins.pass on the increase in excise duties to the end consumers. The increase in petrol prices

The increase in petrol prices will also impact the sales of the company.impact the sales of the company and thereby the margins. Short term impact is neutral. The

Short term impact is neutral.in petrol prices will also impact the sales of the company. The stock has seen a

The stock has seen a sharp run up in the past 3 months and has achieved our target price of Rs 1333.the sales of the company. Short term impact is neutral. We advise to book profit at

We advise to book profit at current levels. However, the stock can be purchased on decline.neutral. The stock has seen a sharp run up in the past 3 months and has

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Union Budget 2012-13 Eicher Motors CMP: Rs 1890 Target Price: Rs 2070 Rating: Hold and
Union Budget 2012-13
Eicher Motors
CMP: Rs 1890
Target Price: Rs 2070
Rating: Hold and BUY on decline
Announcement:
Increase in Excise duty from 10% to 12%.
Building of commercial vehicle chassis were exempt from excise duty but were charged with a flat Rs 10000
duty. This has now been changed to ad valorem rate of 3%.
sVisit Note NotesVisit

Proposal to extend weighted deduction of 200% for R&D expenditure in an in house facility for a further period of 5 years beyond March 31, 2012.changed to ad valorem rate of 3%. sVisit Note NotesVisit Impact: As the company is a

Impact:

As the company is a major CV player, increase in excise duty can have a near term impact on the company.a further period of 5 years beyond March 31, 2012. Impact: We believe that it would

We believe that it would be difficult to pass on the price hike on MHCV sector (around 15% of the portfolio. may impact the overall manufacturing costs of auto companies.in excise duty can have a near term impact on the company. However the LCV segment

However the LCV segment is expected to be the least impacted (around 65% of the portfolio) given the strong demand for LCVs and lower price.impact the overall manufacturing costs of auto companies. Increase in excise duty for automotive chassis will

Increase in excise duty for automotive chassis will have a negative impact on the companyportfolio) given the strong demand for LCVs and lower price. In case of two wheeler business

In case of two wheeler business of the company, Royal Enfield is a premium brand and the company will pass on the hike to the consumer.chassis will have a negative impact on the company Moreover, change in tax slabs will lead

Moreover, change in tax slabs will lead to higher income in the hands of individuals which can increase the demand for two wheelers going forward.brand and the company will pass on the hike to the consumer. Overall impact is marginally

Overall impact is marginally negativecan increase the demand for two wheelers going forward. Munjal Showa Announcement: CMP: Rs 70 Target

Munjal Showa

Announcement:

CMP: Rs 70

Target Price: Rs 97

Increase in Excise duty from 10% to 12%Munjal Showa Announcement: CMP: Rs 70 Target Price: Rs 97 Impact: Rating: BUY Increase in excise

Impact:

Rating: BUY

Increase in excise duty from 10% to 12% for two wheelers will not have a major effect as the company will pass the price hike to the customers.Increase in Excise duty from 10% to 12% Impact: Rating: BUY Moreover, change in tax slabs

Moreover, change in tax slabs will lead to higher income in the hands of individuals which can increase the demand going forward.as the company will pass the price hike to the customers. SECTOR: Banking Key announcements :

SECTOR: Banking Key announcements:

FY13 GDP expected at 7.6% plus or minus 25 bps.demand going forward. SECTOR: Banking Key announcements : FY12 fiscal deficit revised to 5.9% of GDP

FY12 fiscal deficit revised to 5.9% of GDP vs 4.6% target.: FY13 GDP expected at 7.6% plus or minus 25 bps. Fiscal deficit at 5.1% of

Fiscal deficit at 5.1% of GDP in BE 2012-13.FY12 fiscal deficit revised to 5.9% of GDP vs 4.6% target. Inflation is expected to moderate

Inflation is expected to moderate going forward.vs 4.6% target. Fiscal deficit at 5.1% of GDP in BE 2012-13. Allocation of Rs 15,888

Allocation of Rs 15,888 crs for recapitalization of PSU banks in FY13.BE 2012-13. Inflation is expected to moderate going forward. Proposal to allow individual tax payers, a

Proposal to allow individual tax payers, a deduction of upto Rs 10,000 for interest from savings bank accounts.of Rs 15,888 crs for recapitalization of PSU banks in FY13. Dena Bank CMP: Rs 93

Dena Bank

CMP: Rs 93

Impact:

Target Price: Rs 114

Rating: BUY on decline

Dena bank has a CAR of 11.6% with Tier I ratio of 8.54% excluding the ploughed back profit.93 Impact: Target Price: Rs 114 Rating: BUY on decline However, we believe that Dena Bank

However, we believe that Dena Bank will not be requiring additional fund from the government in the near term as the recent 5% stake by LIC ensures that the bank is adequately capitalized.Tier I ratio of 8.54% excluding the ploughed back profit. Higher GDP growth and lower fiscal

Higher GDP growth and lower fiscal deficit is overall positive for the bank.term as the recent 5% stake by LIC ensures that the bank is adequately capitalized. No

No major direct impact.bank is adequately capitalized. Higher GDP growth and lower fiscal deficit is overall positive for the

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Rating: HOLD & BUY on declinee t t – – 1 1 7 7 M U n n i o Impact:

Impact:

Neutral

Yes Bank

Announcement:

CMP: Rs 367

Target Price: Rs 342

Rating: BUY on decline

Proposal to allow individual tax payers, a deduction of upto Rs 10,000 for interest from savings bank accounts.CMP: Rs 367 Target Price: Rs 342 Rating: BUY on decline Impact: Deduction of upto Rs

Impact:

Deduction of upto Rs 10000 for interest from savings bank accounts will help the bank to generate higher CASA as the bank already provides higher interest on savings account (7%). We had recommended to book profit on the stock. However, Yes Bank is a quality stock and so we advise to BUY on decline for a long term perspective

DCB

Announcement:

CMP: Rs 46

No Key announcement madefor a long term perspective DCB Announcement: CMP: Rs 46 Federal Bank Announcement: CMP: Rs 428

Federal Bank

Announcement:

CMP: Rs 428

No Key announcement madeKey announcement made Federal Bank Announcement: CMP: Rs 428 Target Price: Rs 65 Target Price: Rs

Target Price: Rs 65

Target Price: Rs 497

Rating: BUY

Rating: HOLD & BUY on decline

ING Vysya

CMP: Rs 336

Target price: Rs 491

Rating: BUY

 

Announcement:

No Key announcement made  

No Key announcement made

 

SECTOR: Capital Goods and Infra

KEC International Ltd.

CMP: Rs 64

Target price: Rs 74

Rating: Hold

Announcement:

Increase in Excise duty from 10% to 12%Rs 64 T ar get price: Rs 74 Rating: Hold Announcement: ECBs allowed to part finance

ECBs allowed to part finance rupee debt of power projectsHold Announcement: Increase in Excise duty from 10% to 12% Coal for thermal power companies exempted

Coal for thermal power companies exempted from customs dutyECBs allowed to part finance rupee debt of power projects Impact: Increase in excise duty will

Impact:

Increase in excise duty will be passed on by the company. Allowance of ECB for power projects will be beneficial for power companies as they will be able to raise debt at a lower rate through ECB. Exemption of import duty on coal and extension of sunset clause for power sector will have a positive impact on the overall sector. This will have a cascading positive impact on KEC International Ltd.

Sterlite Technologies Ltd. CMP: Rs 41

Announcement:

Target price: Rs 47

Rating: Hold

Increase in Excise duty from 10% to 12%CMP: Rs 41 Announcement: T ar get price: Rs 47 Rating: Hold ECBs allowed to part

ECBs allowed to part finance rupee debt of power projectRs 47 Rating: Hold Increase in Excise duty from 10% to 12% Coal for thermal power

Coal for thermal power companies exempted from customs dutyRating: Hold Increase in Excise duty from 10% to 12% ECBs allowed to part finance rupee

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Union Budget 2012-13 Extension of sunset date on tax holiday fro transmission & distribution business
Union Budget 2012-13
Extension of sunset date on tax holiday fro transmission & distribution business
Impact:
Approximately Rs. 800-900 cr worth of current order book is on fixed price contracts and will be
affected by way of increase in the raw material prices due to increase in excise. The impact could be
in the range of Rs. 8-10 cr which will negatively impact FY13E EPS by 3.2%. Neutral.
sVisit Note NotesVisit

Apar Industries Ltd.

Announcement:

CMP: Rs 145

Target Price: Rs 153

Rating: Hold

Increase in Excise duty from 10% to 12%CMP: Rs 145 T ar get Price: Rs 153 Rating: Hold ECBs allowed to part finance

ECBs allowed to part finance rupee debt of power projectRs 153 Rating: Hold Increase in Excise duty from 10% to 12% Coal for thermal power

Coal for thermal power companies exempted from customs duty12% ECBs allowed to part finance rupee debt of power project Impact: Increase in the excise

Impact:

Increase in the excise duty will be passed on to the customers as part of cost variation clause. No major impact on the company. Neutral.

JMC Projects Ltd.

Announcement:

CMP: Rs 123

Target Price: Rs 183

Rating: Buy

NHDP allocation increased by 14% to Rs. 25,360 cr in FY13 with a target to achieve 8800 km of road projects.Announcement: CMP: Rs 123 T ar get Price: Rs 183 Rating: Buy Foreign borrowing allowed on

Foreign borrowing allowed on capex for maintenance & operation of toll roadsin FY13 with a target to achieve 8800 km of road projects. To allow Rs. 10000

To allow Rs. 10000 cr for NHAI tax free bonds FY13on capex for maintenance & operation of toll roads Increase in excise duty from 10% to

Increase in excise duty from 10% to 12%roads To allow Rs. 10000 cr for NHAI tax free bonds FY13 Impact: Overall positive for

Impact:

Overall positive for the company. The company has no plans of raising ECBs this year. Increase in the excise duty will be passed on to the customers as part of cost variation clause.

Tecpro Systems Ltd.

Announcement:

CMP: Rs 168

Target Price: Rs 275

Rating: Buy

Fuel supply agreements to be signed by Coal India with power producers for projects that would get commissioned on or before 31 s t March 2015 st March 2015

Coal for thermal power companies exempted from customs dutywould get commissioned on or before 31 s t March 2015 Impact: It will have a

Impact:

It will have a positive impact on power generation projects and will have a cascading positive impact on Tecpro Systems who specializes on coal handling equipment.

SECTOR: Cement

Heidelberg Cement

Announcements:

CMP: Rs 36

Target Price: Rs 45

Rating: BUY

The government has increased the excise duty for cement manufacturers from 10% ad valorem +Rs 160/bag to 12% ad valorem +Rs 120/bag.Announcements : CMP: Rs 36 Target Price: Rs 45 Rating: BUY Earlier the excise duty of

Earlier the excise duty of 10% was calculated based on transaction value (retail sales price adjusted for dealer margin, VAT and specific excise duty). Now it is proposed to calculate the excise duty of 12% on retail sales price less 30% of abatement.10% ad valorem +Rs 160/bag to 12% ad valorem +Rs 120/bag. The combined effect is likely

The combined effect is likely to be Rs 20/ton.duty of 12% on retail sales price less 30% of abatement. The government has announced the

The government has announced the reduction of import duty on steam coal from 5% to nil for a period of next two years (till 31 s t March, 2014). st March, 2014).

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Union Budget 2012-13 Impact: Positive SECTOR: Consumer Durables sVisit Note NotesVisit
Union Budget 2012-13
Impact:
Positive
SECTOR: Consumer Durables
sVisit Note NotesVisit

Havells

Announcement:

CMP: Rs 579

Target Price: Rs 539

Excise duty increased from 10% to 12%Havells Announcement: CMP: Rs 579 Target Price: Rs 539 Impact: Rating: Book Profit The companies are

Impact:

Rating: Book Profit

The companies are expected to take price hike in order to pass on the increase in excise duty to user. Neutral for Havells, Bajaj Electricals and V Guard Industry

the end

Excise duty on LED lamps is being reduced to 6% 

 

Impact:

Positive

Bajaj Electricals

CMP: Rs 181

Target Price: Rs 210

Rating: Hold

Announcement:

Excise duty increased from 10% to 12% 

 

Impact:

The companies are expected to take price hike in order to pass on the increase in excise duty to user. Neutral for Havells, Bajaj Electricals and V Guard Industrythe end

the end

Excise duty on LED lamps is being reduced to 6% 

 

Impact:

Positive

V Guard

CMP: Rs 186

Target Price: Rs 231

Rating: BUY

Announcement:

Excise duty increased from 10% to 12% 

 

Impact:

The companies are expected to take price hike in order to pass on the increase in excise duty to user. Neutral for Havells, Bajaj Electricals and V Guard Industry

the end

Excise duty on LED lamps is being reduced to 6%Havells, Bajaj Electricals and V Guard Industry the end Impact: Positive SECTOR: FMCG ITC Announcement: CMP:

Impact:

Positive

SECTOR: FMCG

ITC

Announcement:

CMP: Rs 216

Target Price: Rs 230

Rating: Hold & BUY on decline

Government increased basic excise duty on cigarettes of more than 65mm length by adding an ad valorem component of 10 per cent to the existing specific rates. The ad valorem duty would be chargeable on 50 per cent of the Retail Sale Price declared on the pack.216 Target Price: Rs 230 Rating: Hold & BUY on decline Impact: As anticipated by industry

Impact:

As anticipated by industry experts, the excise duty has been raised by 15%. We believe ITC has enough pricing power to pass on excise duty hikes that are in the normal course of business without impacting its

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Union Budget 2012-13 earnings. We have already factored in the rise of excise duty in
Union Budget 2012-13
earnings. We have already factored in the rise of excise duty in our estimates. Hence, this will result in no
change in earnings.
Radico Khaitan
CMP: Rs 122
Target Price: Rs 155
Rating: BUY
sVisit Note NotesVisit
Target Price: Rs 155 Rating: BUY sVisit Note NotesVisit Announcement: The excise duty increased by 2%

Announcement:

The excise duty increased by 2%

Impact:

We were expecting a higher increase in excise duty but in the budget it was hiked by 2%. According to the management, the increase in excise duty will have an impact of Rs. 4-5 cr which the management is confident of passing it on to the end user. Hence, this will result in no change in earnings.

SECTOR: Information Technology

Redington India

CMP: Rs 90

Target Price: Rs 109

Rating: HOLD

Announcement:

Allocation of Rs.14232 crores (13% higher) in FY13E reinforces UID Aadhaar‘s gravity and removes fears of the project getting scrapped.

Impact:

Positive

KPIT

CMP: Rs 83

Target Price: Rs 94

Rating: HOLD

Announcement:

Removal of MAT levy (18.5%) on SEZ Developers and Units was expected. However, no announcement in this regard was made and the impact would be Neutral for KPIT Info since we had not factored it into our projections.

Polaris Software

CMP: Rs 167

Target Price: Rs 190

Rating: HOLD

Announcement:

Removal of MAT levy (18.5%) on SEZ Developers and Units was expected. However, no announcement in this regard was made and the impact would be Neutral for Polaris since we had not factored it into our projections.

Persistent Systems

CMP: Rs 313

Target Price: Rs 409

Rating: BUY

Announcement:

Removal of MAT levy (18.5%) on SEZ Developers and Units was expected. However, no announcement in this regard was made and the impact would be Neutral for Persistent since we had not factored it into our projections.

Take Solutions

CMP: Rs 34

Target Price: Rs 44

Rating: HOLD

Announcement:

Removal of MAT levy (18.5%) on SEZ Developers and Units was expected. However, no announcement in this regard was made and the impact would be Neutral for Take Solutions since we had not factored it into our projections.

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Union Budget 2012-13 SECTOR: Metals IMFA CMP: Rs 346 Target Price: Rs 421 sVisit Note
Union Budget 2012-13
SECTOR: Metals
IMFA
CMP: Rs 346
Target Price: Rs 421
sVisit Note NotesVisit

Announcement

Excise duty increased from 10% to 12%Target Price: Rs 421 sVisit Note NotesVisit Announcement Rating: HOLD Impact: As per industry expectation, the

Rating: HOLD

Impact:

As per industry expectation, the excise duty was hiked by 2%. IMFA generates 75-80% of revenue from exports where the hike in excise duty is not applicable. The balance revenue comes from domestic market which will bear some impact if the company is not able to pass it on to the customers. Marginal Negative to IMFA

Export Duty on chromium ore has been enhanced from Rs. 300/- per ton to 30%to pass it on to the customers. Marginal Negative to IMFA Impact: IMFA will not have

Impact:

IMFA will not have any impact as it has captive rights for its chrome ore mines.

SECTOR: Pharmaceuticals

Ajanta Pharma

Announcements:

CMP: Rs 455

Target Price: Rs 545

Excise Duty has been increased from 10% to 12%Pharma Announcements: CMP: Rs 455 Target Price: Rs 545 Rating: Buy on Declines Impact: The company

Rating: Buy on Declines

Impact:

The company has 60% exports and as a result it is currently paying net excise duty of 1% on its consolidated gross sales. A 2% increase in the basic rate would not have any impact on the financials of the company. Ajanta Pharma also has the pricing power through which it can pass on the impact, if any.

Extension of weight average reduction on in-house Research and Developmentpower through which it can pass on the impact, if any. Impact: It is positive for

Impact:

It is positive for the sector in general and for Ajanta Pharma in particular as it encourages companies to spend more on R&D for the benefit of mankind and for their future growth. Ajanta Pharma spends 5% of revenues on R&D.

Removal of cascading effect of Dividend Distribution Tax on Dividends from foreign subsidiariesgrowth. Ajanta Pharma spends 5% of revenues on R&D. Impact: There is no effect of the

Impact:

There is no effect of the above announcement on Ajanta Pharma as it is not receiving dividends from foreign subsidiary.

MAT on partnerships and other form of originationsas it is not receiving dividends from foreign subsidiary. Impact: The above announcement would impact big

Impact:

The above announcement would impact big Pharma companies as they have formed partnership firms in tax free zone and were paying lower tax on that. But, now they have to pay higher tax which would impact their earnings. However, it won’t have any impact on Ajanta Pharma

NRHM increased from Rs 18,115 cr to Rs 20,822 crHowever, it won’t have any impact o n Ajanta Pharma Impact: Sentimentally positive for the company

Impact:

Sentimentally positive for the company and for the sector

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Union Budget 2012-13 SECTOR: Others Astral Polytechnik Ltd CMP: Rs 188 Target Price: Rs 226
Union Budget 2012-13
SECTOR: Others
Astral Polytechnik Ltd
CMP: Rs 188
Target Price: Rs 226
sVisit Note NotesVisit

Rating: HOLD

Target Price: Rs 226 sVisit Note NotesVisit Rating: HOLD Announcement: No major announcements were made for

Announcement:

No major announcements were made for the Housing sector. However, Excise Duty is increased from 10% to 12%. The company derives some part of its revenues from the tax exempted region and the rest the company would be able to pass it to its customers. Impact would be Neutral for the company.

Disclaimer:

This Document has been prepared by Nirmal Bang Research (A Division of Nirmal Bang Securities PVT LTD). The

information, analysis and estimates contained herein are based on Nirmal Bang Research assessment and have been

obtained from sources believed to be reliable. This document is meant for the use of the intended recipient only. This

document, at best, represents Nirmal Bang Research opinion and is meant for general information only. Nirmal Bang

Research, its directors, officers or employees shall not in any way be responsible for the contents stated herein. Nirmal

Bang Research expressly disclaims any and all liabilities that may arise from information, errors or omissions in this

connection. This document is not to be considered as an offer to sell or a solicitation to buy any securities. Nirmal Bang

Research, its affiliates and their employees may from time to time hold positions in securities referred to herein. Nirmal

Bang Research or its affiliates may from time to time solicit from or perform investment banking or other services for

any company mentioned in this document.

Nirmal Bang Research (Division of Nirmal Bang Securities PVT LTD) B-2, 301/302, Marathon Innova, Opp Peninsula Corporate Park Off Ganpatrao Kadam Marg Lower Parel (W), Mumbai-400013 Board No. : 91 22 3926 8000/8001 Fax. : 022 3926 8010