PSU banks to benefit from treasury gains on lower fiscal deficit
New Delhi: A lower fiscal deficit versus estimated is likely to raise government bond prices and a treasury gain is very likely for the public sector banks, LKP Securities said in a report on sectoral impact of Interim Budget 2024.
PSU banks were the top gainers in trade on Thursday. Nifty PSU Bank was the sector which outperformed, up by 3.11 per cent.
ITDC was up 20 per cent following the Budget announcement on the push for tourism. Hudco was up 19 per cent following the announcement on affordable housing scheme.
Infra spending increasing 11.1 per cent YoY to Rs 11 trillion (3.4 per cent of GDP) in FY25 may boost capital expenditure across the economy and is a boost for infrastructure finance companies, LKP Securities said.
The PM Awas Yojana (Rural) is close to achieving a target of three crore houses and an additional target of two crore houses (rural + urban) in next five years. It is likely to boost affordable HFC's credit.
Additionally, a housing for middle class scheme will be launched for promoting middle class to buy/build their own houses.
The GNPA ratio of PSU banks stands at a decade low of 3.2 per cent (as of 2QFY24).
Lower fiscal deficit results into lower government borrowings thus support G-sec yields. Positive impact on treasury income for banks. Fiscal deficit target for FY24 has been set to be 5.8 per cent, for FY25 is projected at 5.1 per cent of GDP and for FY26 it is projected at 4.5 per cent of GDP, IDBI Capital said in a report.
Under the Rooftop Solar Scheme, 10 million households will get 300 units of free electricity every month and the scheme would enable these households to sell their surplus solar energy and is projected to yield annual savings of over Rs 15,000 for these households. Solar power companies are the beneficiaries, LKP Securities said.
Promotion to adopt e-buses for public transport network and strengthening the e-vehicle ecosystem by supporting manufacture and charging infrastructure will benefit Tata Motors, Olectra, and Ashok Leyland, it added.
The government will also launch an affordable housing scheme for the middle-income category citizens. Affordable housing finance companies and NBFCs providing home loans could have an opportunity to grow their advances in order to meet the credit demands, IDBI Capital said.
Also, coal gasification and liquefaction capacity of 100 MT will be set up by 2030. This will also help reduce imports of natural gas, methanol, and ammonia.
Ministry-wise data suggests major increase is seen for the Department of Economic Affairs (sunrise sector), Telecom (infusion in BSNL), and Petroleum (capital support to OMC), the report said.
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