The Finance Minister Nirmala Sitharaman's Union Budget for FY2024-2025 may focus on capex-led infrastructure, even as there could be a dash of welfarism. There are hopes that defence capital outlay may grow 12-15 per cent YoY on back of systems modernisation and infra development, as focus on indigenisation and exports ramp-up persists.
On the other hand, railways capex is expected to further elevate to 20 per cent growth YoY led by further expansion of DFCs, rolling stock, HSR networks etc. as outlined in NRP.
In the transmission and distribution sector, there are hopes of push towards renewable energy and hence grid expansion. Cement stocks would keenly track outlay on PMAY housing and announcements on three major economic corridors - energy, mineral and cement, is what the Street is looking for in the Budget.
In the new energy sector, there are hopes of increase in PLI outlay on solar PV module and cell manufacturing, in addition to import duty cuts on solar modules. In the case of power sector, the government may announce some supportive policy measures for financing renewable projects with a longer duration at attractive rates, analysts said, adding that the government may take some measure for energy storage technology and RE energy supply.
Ravi Singh, Senior Vice-President (Retail Research) at Religare Broking is positive on PSU stocks, especially defence and railways.
On PSUs, he said the government will focus more on capital reconstruction to improve financial health and operational efficiency. It, Singh said, will focus on indigenization, boosting domestic manufacturing, reducing dependency on imports, and creating local jobs. For railways, he said plans are to add more trains and modernize existing infrastructure, including upgrading technology, improving passenger experience, and enhancing safety measures.
"The budget may enhance capital expenditure for infrastructure creation and open up avenues for alternative financing. Additionally, it might incentivize the private sector to participate in infrastructure projects and subsidize green technology to reduce dependence on fossil fuels," said Asit C Mehta.
In its Budget note, Sharekhan said it prefers UltraTech Cement, Larsen & Toubro (L&T), PNC Infratech, NTPC, Power Grid, Coal India, VA Tech Wabag, DEE Development, Triveni Turbines, Supreme Industries, Tata Power and CESC.
Narendra Solanki, Head Fundamental Research at Anand Rathi Shares and Stock Brokers has ITC, Varun Beverages Ltd and Minda Corp as his top Budget picks.
L&T, IRCTC, HAL, and BEL, Trivesh D, COO, Tradejini
Manish Chowdhury, Head of Research at StoxBox has HUDCO, Hindustan Aeronautics and IRCON International as key Budget picks.
"HUDCO anticipates 15 per cent annual loan growth from FY24 to FY30, driven by state agency contracts and a focus on high-yield infrastructure assets, aiming for improved financial metrics and strong government support in the NBFC sector," he noted.
It said HAL, a leader in Indian aerospace and defense, is targeting substantial growth with a Rs 94,000 crore order book and impressive financial metrics including 29 per cent ROE and 32 per cent margins in FY24. Supported by strategic alliances and India's defense self-reliance goals, HAL offers compelling investment potential in defense manufacturing, he said
"IRCON, specializing in railway and infrastructure projects, showcases a robust Rs 27,208 crore order book and strong financial performance with a 17 per cent ROE. Positioned to benefit from India's infrastructure investments, IRCON plays a pivotal role in enhancing transport networks and economic growth, he said.
Fisdom said L&T, KNR Constructions and PNC Infratech wil be in focus on likely increase in capex spending; and IRCTC, Container Corporation of India and Titagarh Wagons on likely high railway spends. It sees DLF Ltd, Godrej Properties and Oberoi Realty among realty, BEL, HAL and BDL among defence; and M&M, Escorts and UPL among agri plays. Tata Power Ltd, Adani Green Energy Ltd and NTPC Ltd among top stocks to watch tomorrow.
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