What the Budget does
- Steel melting scrap will be exempt from customs duty
- Excise duty reduction in select segments of automobile manufacturing
- Continuation of power sector reforms
- Coal regulator to be appointed
- Dividend tax paid by parent company allowed to be set off against the same paid by its subsidiary
Also read: How Budget affects your stocks
Impact on sector
- Reduction in customs duty on scrap will help steel manufacturers that use the electric arc furnace route for steel manufacturing lower their costs. On the other hand, it will be a negative for manufacturers that use the blast furnace route.
- If auto manufacturers pass on the reduced excise benefits in the form of lower prices, it will help spur demand for automobiles, which in turn will drive steel demand
- Increased investment in the power sector will also help boost demand for steel
- The proposed coal regulator will help ease the process of allocating coal blocks, a key raw material in the steel manufacturing process
Impact on companies
- Reduction in excise duties on automobiles will help companies that supply steel to auto makers. Key beneficiary would be Tata Steel
- Players that supply steel to the power equipment companies like SAIL and JSW Steel will benefit from increased investments in the power sector
- Better access to coal mines will be a positive for all the players that do not have their own captive mines
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