Budget 2025: As Finance Minister Nirmala Sitharaman prepares to present the Union Budget on February 1, 2025, investors and market watchers are keenly eyeing key sectors that could benefit from government policies. This Budget comes at a crucial time, with global and domestic uncertainties impacting economic growth and stock market performance.
With expectations of increased capital expenditure, infrastructure development, and policy support across multiple sectors, here’s a look at 25 stocks that are likely to be influenced by Budget 2025.
1. Infrastructure & Capex Boom: L&T, UltraTech Cement
The infrastructure sector has been under pressure, with post-election concerns leading to slower order flows. Government capital expenditure saw a 12.3% contraction during April-November FY24, highlighting the need for a boost in FY25.
- Larsen & Toubro (L&T): With a strong order book and growing investor interest, L&T could benefit from the government’s focus on roads, highways, and urban infrastructure.
- UltraTech Cement: A projected 10-12% capex increase for infrastructure projects and affordable housing could push demand for cement, especially if a GST reduction on cement is announced.
2. Road & Highway Expansion: KNR Construction, Ashoka Buildcon
The government is expected to increase the Ministry of Road Transport & Highways (MoRTH) allocation by 5-6%, spurring private investments in infrastructure projects.
- KNR Construction & Ashoka Buildcon: These companies are well-positioned to capitalize on upcoming highway, rural road, and urban connectivity projects. However, land acquisition and regulatory hurdles remain potential risks.
3. Power Sector Revival: Siemens, Thermax
The Ministry of Power saw a 16% budget increase in FY25 (Rs 20,502 crore), with similar allocations expected in FY26, particularly for renewable energy initiatives.
- Siemens: A tripling of transmission project bids over the last two years signals a strong revenue pipeline.
- Thermax: With a focus on clean energy solutions and industrial power, the company is set to benefit from increased infrastructure capex and sustainability initiatives.
4. Defence Modernization: HAL, BEL
With 2025 declared the ‘Year of Defence Reforms’, the government is prioritizing indigenization and modernization.
- Hindustan Aeronautics Limited (HAL): The company reported a 50-52% YoY order growth in FY24 (~Rs 40,000 crore) and aims for Rs 60,000+ crore in FY25.
- Bharat Electronics Ltd (BEL): Holding a 60% market share in defence electronics, BEL is expected to benefit from increased capital expenditure in avionics, radars, and communication systems.
5. Railways Expansion: RVNL, BEML, IRFC
The railway budget is expected to increase by 15-18%, with investments in modernizing rolling stock, expanding Vande Bharat trains, and enhancing safety infrastructure.
- RVNL (Rail Vikas Nigam Limited): Focused on railway electrification, network expansion, and AI integration for tracking systems.
- BEML: Expected to receive significant orders for railway coaches, metro rail, and defence manufacturing projects.
- IRFC (Indian Railway Finance Corporation): Will play a key role in funding large-scale railway capex projects.
6. Real Estate Growth: Oberoi Realty, PNB Housing, AAVAS Financiers
The real estate sector is eyeing potential relief through GST adjustments, affordable housing incentives, and tax rebates.
- Oberoi Realty: Likely to benefit from policy support in urban housing, luxury projects, and commercial real estate.
- PNB Housing & AAVAS Financiers: A possible revival of the Credit-Linked Subsidy Scheme (CLSS) under PMAY could provide a boost to housing finance companies.
7. FMCG & Consumption Boost: HUL, ITC, Dabur, Marico, Emami
With expectations of higher tax exemptions and increased standard deduction, disposable incomes could rise, driving FMCG sector growth.
- Hindustan Unilever (HUL) & ITC: Both stocks are down from 52-week highs, but a shift in government policy toward welfare and consumption could drive demand.
- Dabur, Marico, Emami: Rising rural incomes and inflation control measures could spur demand for personal care and household products.
8. Renewable Energy & Green Hydrogen: Waaree Energies, Inox Wind, NTPC Green
India has set a 500 GW renewable energy target by 2030, and the Budget is expected to prioritize solar, wind, and hydrogen projects.
- Waaree Energies & Inox Wind: Increased subsidies and incentives for solar and wind projects will benefit these companies.
- NTPC Green: NTPC’s expansion into green hydrogen aligns with the government’s push for clean energy initiatives.
9. Solar Energy Push: Adani Solar, Borosil Renewables, Sterling & Wilson
With India’s solar sector adding 15 GW capacity in 2024 (double the previous year), investments in rooftop solar and battery energy storage systems (BESS) are gaining momentum.
- Adani Solar & Borosil Renewables: Could see increased demand with expanding rooftop solar programs under PM Surya Ghar Yojana.
- Sterling & Wilson: Well-positioned to benefit from policy incentives for domestic solar manufacturing.
Key Financial Ratios to Watch
For investors tracking these stocks, the following financial ratios provide insights into potential growth and stability:
- Price-to-Earnings (P/E) Ratio: Evaluates valuation compared to earnings.
- Debt-to-Equity (D/E) Ratio: Measures financial leverage.
- Return on Equity (ROE): Indicates profitability efficiency.
- Earnings Per Share (EPS): Essential for growth projections.
- Operating Profit Margin (OPM): Measures core profitability.
Final Thoughts
Budget 2025 is set to play a pivotal role in shaping India’s economic trajectory. With increased government spending expected across infrastructure, defence, railways, real estate, and renewable energy, these 25 stocks could see significant movement in the coming months.
Investors should closely monitor policy announcements, sector allocations, and financial ratios before making investment decisions. A well-diversified approach focusing on government-backed sectors could help capitalize on the upcoming budget-driven opportunities.
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Disclaimer: This blog post is for informational purposes only and should not be considered financial advice. Investors should conduct thorough research and consult with a qualified financial advisor before making any investment decisions.
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