10 Stocks That May Gain From Budget

The fiscal tilt towards capex benefits companies in investment-related sectors like capital goods, defence equipment, engineering & construction and metal & mining.
The planned cut in revenue expenditure will weigh on companies in consumption sectors like FMCG, consumer durables and retail.

The FY27 Union Budget was a balancing act with the government trying to maintain capex growth despite a lower than expected revenue growth.

The overall central government capital expenditure is budgeted to grow by 9 per cent year-on-year (Y-o-Y) in FY27 to Rs 12.2 trillion from FY26 revised expenditure of Rs 10.96 trillion.

FY27 Budget Capex Growth

By comparison, the central government revenue expenditure is budgeted to decline by 2.5 per cent Y-o-Y to Rs 22.29 trillion in FY27 from FY26 revised estimates (FY26RE) of Rs 22.76 trillion.

The Union government's overall expenditure is expected to grow by 5.6 per cent Y-o-Y to Rs 53.47 trillion from the FY26 RE of Rs 49.65 trillion.

The revenue projections, however suggest that the government doesn't expect any tax buoyancy in FY27 and hints at growth moderation.

The central government gross tax revenue is expected to grow by just 8 per cent Y-o-Y to around Rs 44 trillion in FY27 from Rs 40.77 trillion in FY26RE.

This will mean tax to GDP growth elasticity of 0.8 per cent given nominal GDP growth of 10 per cent in FY27.

Weak Tax Buoyancy Signal

A lack of tax buoyancy is largely due to the projected 2.3 per cent Y-o-Y growth in indirect taxes in FY27 that hints at a weak demand condition in the economy which could weigh on corporate sector growth.

The fiscal tilt towards capex benefits companies in investment-related sectors such as capital goods, defence equipment, engineering & construction and metal & mining.

The planned cut in revenue expenditure on the other hand, will weigh on companies in consumption sectors such as FMCG, consumer durables and retail.

Here are 10 stocks across sectors that are likely to gain from Budget proposals.

L & T

• Brokerages expect Larsen & Toubro (L&T) to be a major beneficiary of the Budget's focus on public capex on physical and transport infrastructure such as highways, rail transport, airports among others
• L&T's stock is expected to deliver 17.7 per cent upside from current levels on the back of a continued traction in its revenue and earnings growth
• The company's order book and revenue growth are sensitive to growth in government capex and Budget proposes 9 per cent rise in govt capex in FY27 over FY26 revised estimates

Capex-Led Investment Sectors

HPCL

• The status quo on excise and customs duties on petroleum products was a relief for Hindustan Petroleum Corp (HPCL) and its stock has rallied strongly post Budget
• HPCL is up 6 per cent post Budget as investors flocked back to the stock after nearly a month of sell-off
• HPCL stock price had declined by 17 per cent in January due to expectation of LPG losses and concern over petrol and diesel excise duty hike
• Brokerages have now turned bullish on the stock due to weak crude oil price environment, declining capex intensity and start of its Rajasthan refinery
• HPCL's Q3FY26 was strong with 58 per cent YoY jump in net profit on 4.1 per cent YoY rise in net sales

Pressure on Consumption Stocks

Supreme Industries

• The Budget has increased the allocation to Jal Jeevan Mission/National Rural Drinking Water Mission by 298 per cent. Supreme Industries is likely to be a major beneficiary, as it is the largest player in the infrastructure plastic pipe segment
• Allocation to Pradhan Mantri Awas Yojna (PMAY-Urban & PMAY-Urban 2.0) is up 148 per cent from FY26 revised estimates and is partially positive for building material companies such as Supreme
• The Swachh Bharat Mission – Urban 2025 with an allocation of Rs 5,000 crore will improve sanitary market penetration

Defence Spending Slowdown

Dabur India

• The Budget introduces targeted fiscal measures and policy interventions impacting the FMCG sector across food processing, personal care, household appliances, tobacco, alcohol, and rural retail
• The coconut production scheme will help in lowering the volatility of coconut production and prices and thereby reduce margin impact for coconut oil players. This is positive in the long term for Dabur, Marico and Bajaj Consumer among others
• Focus on agriculture push and city economic regions will be positive for consumption stocks, especially ones such as Dabur, Emami and Hindustan Unilever, say analysts

BioPharma SHAKTI Push

HAL

• There were few cheers for defence equipment maker Hindustan Aeronautics (HAL) in the Budget
• The overall defence spending is up just 4.7 per cent YoY in FY27, a sharp slowdown from 26 per cent YoY increase in FY26
• Slowdown in defence spending could weigh on HAL's order inflow for new fighter jets such as Tejas and Sukhoi 30 MKI
• The market reaction has been negative and HAL's share price is down 6 per cent post Budget

PLI for Auto and EVs

Biocon

• Under BioPharma SHAKTI, the government has proposed an outlay of Rs 10,000 crore over five years to strengthen biologics and biosimilars sector
• The move focuses on integration and upgradation of National Institute of Pharmaceutical Education and Research and creation of over 1,000 accredited clinical trial sites. This marks a clear pivot from volume-led generics to a value-led Bio-Pharma hub with global ambitions
• The aim is to position India as a global biopharma manufacturing hub and build an ecosystem for domestic production of biologics and biosimilars
• Biocon, the largest player in this space, is seen benefiting the most from the Budget proposals
• Ambit Research believes this provides the necessary impetus for domestic manufacturing to move up the value chain into large molecules, especially as global innovators explore new partnerships under the China+1 strategy

Rare Earth Corridors

Max Healthcare Institute

• The government will facilitate 5 regional healthcare hubs (hospitals, diagnostics, and rehabilitation) under the public-private partnership model to promote medical tourism and improve healthcare
• Additionally, 50 per cent capacity expansion in emergency and trauma care at district hospitals and the establishment of NIMHANS-2 have been announced to improve critical care accessibility
• The measures are positive for players such as Max Healthcare as it operates under the public-private partnership model and has a higher medical tourism reach

Healthcare Hubs and Medical Tourism

REC

• Power project lender, REC is expected to gain from the Budget proposal to restructure Power Finance Corporation (PFC) and REC as part of a broader plan to strengthen government owned financial institutions
• This could see a REC getting merged with its parent PFC, which is positive for the firm
• Currently, PFC owns 52.63 per cent in REC, making it a subsidiary
• REC is currently trading at trailing P/E of 5.5x and P/BV of 1.14x

Tata Motors

• The Production-Linked Incentive (PLI) scheme for the automobile and auto components sector, estimated at Rs 5,939 crore, will boost production, enhance localisation and contribute to export growth
• Dedicated rare earth corridors reduces reliance on China, strengthens supply chain resilience and supports ramp up of India's EV adoption. It is positive for OEMs exposed to EV sales such as Tata Motors, points out Centrum Research
• Tata Motors is seen gaining from such Budget proposals

NMDC

• The public sector mining giant, NMDC is likely to be a major beneficiary of Budget's focus on boosting rare earths mining and processing in the country
• Budget pushed up allocation to National Critical Mission to Rs 440 crore for FY27 from just Rs 90 crore in FY26. The government has also promised easy project approvals and relaxed rules to guide more investment towards rare earth and critical minerals
• Budget proposals to set up dedicated rare earth mineral corridors in Tamil Nadu, Kerala, Odisha and Andhra help NMDC

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Feature Presentation: Ashish Narsale/Rediff