What would be the big sectoral themes you would see in Budget 2022, which could set the tone for the future?

If one were to look at the futuristic ideas in the Union Budget; you can break it up into EV batteries, solar equipment, telecom and defence equipment. Here is how.

Firstly, let us look at EV batteries. Budget 2022 has announced a full-fledged battery swapping policy for electrical vehicles. The EV ecosystem was the missing link and now that has been adequately addressed. This will certainly be positive for auto companies with a strong EV franchise, but will also benefit battery manufacturers with aggressive EV battery plans on the anvil. These could include the likes of Amara Raja Batteries, Exide etc.

Secondly, let us look at the solar theme. Budget 2022 has made an aggressive allocation of Rs.19,500 crore towards production linked incentives or PLI for manufacturing solar modules, solar panels and other support systems and equipment for the generation, transmission and distribution of solar energy. Solar infra will also get infrastructure status, benefitting some of the key players in India like Adani Enterprises and Tata Power.

Another exciting theme from the Budget 2022 is telecom at multiple levels. Firstly, Union Budget 2022 has confirmed the launch of 5G services in India during FY23. That is fairly imminent In addition, data centres have been accorded infrastructure status, with all relevant benefits flowing to them. This is most likely to boost stocks like Tata Communications and Tejas Networks; apart from the traditional telecom plays.

Finally, there is an interesting story on defence in-sourcing that is also building up. Government has set aside 68% of defence capex for giving orders to local defence companies; up by 1000 bps on a yoy basis. That means happy days for most Indian defence equipment manufacturers which will gain from overflowing order books. Some of the key beneficiaries include Paras Defence, L&T,  MTAR and Data Patterns.