Best Budget Buys

Mr.Chidambaram has come, announced and gone. Now we all scramble to read the fine print and figure out as to who will benefit and who will lose. Though the market has taken a beating after the Budget was announced, there are quite a few nuggets on Dalal Street which will help you tide over this Budget, infact they will help you emerge winners.

You can buy these stocks at the current market rates as they present a great opportunity for making a value buy at this juncture, in the post Budget scenario.


MARUTI SUZUKI INDIA:

The excise duty on small cars has been reduced to 12% from 16% and on Hybrid cars from 25% to 14%. This will bring down the costs by almost Rs.12,000-15,000, giving a spurt to demand. The stock has been the biggest gainer of the day and is now at Rs.870. One can get into the stock to cash in on the momentum.

Maruti Suzuki India’s net profit rose 24.1% to Rs.467.04 crore on 27% rise in sales to Rs.4,674.13 crore in Q3 December 2007.


PANACEA BIOTECH:

The Budget increased the allocation for HIV and polio drugs. Panacea is the leader in manufacture of polio vaccines. And this increased allocation will benefit the company immensely. It recently was pre-qualified by WHO for supplying its innovative combination vaccines for pediatric immunization - EasyFour (DTP + Hib) and Ecovac (DTP + Hep B). It is already a pre-qualified supplier of OPV and Hepatitis-B vacuities to UN agencies.

Now with this pre-qualification by WHO, Panacea Biotec would participate in a large global market of combination vaccines for pediatric immunization. It recently inaugurated its ultra modern, Greenfield construction, vaccine production plant at Baddi, H.P., with over Rs 100 crore investment in Sept'07, having capacity of more than 1 billion doses per annum, to cater to domestic and global markets. With this latest state-of-art facility, the total capacity to produce vaccines by Panacea Biotec would be doubled to two billion doses per annum. The commercial production is expected to commence in next financial year.

Currently quoted at Rs.318, the company is one of the best post Budget buys on the bourses today.


WEST COAST PAPER:

The Indian paper industry got a much sought-after reduction in excise duty on paper and paperboards that will help boost investments, enabling them to compete with imported paper. Exicse duty has been reduced on writing and printing paper and paperboards to 8% from 12%. The fund allocation for education has also been increased by 20% in 2008-09. Both these factors together is expected to give a major boost to the demand for paper.

The market has not fully discounted the impact of these on the paper sector and especially on West Coast Paper, which remained flat at Rs.80. For the nine months to December 31, 2007, it has reported a 34% increase in profit after tax to Rs 64 crore and 7% increase in sales to Rs.432 crore, citing a upward revision in sale prices, lower power & fuel cost on commissioning of FBC III boiler and improved working of cable division, coupled with foreign exchange gain. A great post Budget buy at the current rate.


APOLLO HOSPITALS:

Finance Minister Chidambaram proposed an allocation of Rs 16,534 crore for the healthcare sector in the Union Budget for FY 08-09. He also proposed a five year tax holiday for hospitals being set up in TierII and TierIII cities.

Surprisingly, stocks in this sector did not record too much of a gain and that in itself represents a great opportunity. Currently quoted at Rs.495, the stock presents a great potential to rise when the market reads the fine print of the Budget and comes back smarter on Monday. Buy this stock and then ride the wave of the momentum.


BHEL:

Bhel is engaged in manufacturing and distributing electrical, electronic, and mechanical and nuclear power equipment like turbines, boilers and generators. Given the thrust which the finance minister has laid on the manufacturing sector, he reduced the CENVAT rates on all goods from 16% to 14% and at the same time, gave sops for fuelling industries like power, infrastructure, all in turn are expected to lead to a spurt in orders for the BHEL. The Finance Minister urged bidding for 5 more UMPP’s and once this happens, this too will present a great opportunity for the BHEL.

On 29th Feb itself, BHEL secured an order worth Rs.1893 crore from GSPC Pipavav Power Co in western India for a 700 megawatt power plant.

The market discounted neither the advantage of the Budget nor the merit of the new order. Currently quoted at Rs.2282, it infact fell after the Budget. It presents a great post Budget buy for great gains.


GITANJALI GEMS:

The Finance Minister completely removed the customs duty on rough cubic zirconia diamonds from the present 5%. The basic customs duty on polished cubic zirconia was reduced from 10% to 5%.

Gitanjali Gems is a well known name in the jewellery and diamonds sector. Infact it was amongst the first entrants to get into aggressive retail segment and establish its brand name in diamonds and jewellery. Gitanjali's brands (own and those licensed to it by Diamond Trading Corporation — DTC) such as Gili, Asmi and Nakshatra are all well established in the market.

This move of reducing the customs duty will help the company procure the diamonds at a much reduced rate which in turn will add on to its margins. Jewellery is Gitanjali’s forte and that is where the margins are. This move will benefit the company immensely. Currently quoted at Rs.289, this stock too fell after the Budget. Pick up this gem before the others realize its worth!


NIIT:

One of the biggest beneficiaries of this Budget has been the education sector. The Finance Minister proposed higher spending for education by 20% in the union budget for 2008-09, from Rs.28,674 crore to Rs.34,4000 crore. He also proposed to set up 16 central universities in 2008-09. The thrust has been to provide more allocation for education, especially at the primary school level.

This move is expected to benefit companies like NIIT who are into providing IT enabled education not only in urban areas but also in semi-rural areas, it currently runs 200 centers all over India. NIIT has trained over 9,000 students using Microsoft's learning content, successfully in the first phase. The two Companies are now targeting at training nearly 100,000 students in the next three years on leading Microsoft Technologies.

The stock has remained virtually flat at Rs.124 post Budget. With the increased thrust on education and the growing importance of IT based knowledge, NIIT will benefit immensely from this Budget. Definitely a good pick.


NTPC:

The Union Budget, as expected has laid great stress on power and has provided many sops to this sector. The Finance Minister has urged companies to bid for five new UMPPs. He has also proposed the setting up of a National fund for transmission and distribution of power and allocated Rs.800 crore for accelerated power reform in FY09.

In this respect, NTPC could reap immense benefits from the Budget. It has today grown into the largest power utility of India. NTPC is the sixth largest thermal power generator in the World and the second most efficient utility in terms of capacity utilisation.

Currently quoted at Rs.202, the stock actually fell post Budget. A great pick for all seasons, post Budget it looks all the more attractive.