Top stocks from top three sectors to keep eye on the Budget Day 2024

The Union Budget 2024, slated for presentation by Finance Minister Nirmala Sitharaman on February 1, is generating anticipation as a growth-oriented and reform-driven budget. The budget is likely to bring forth significant announcements and incentives, especially for pivotal sectors such as infrastructure, defence, and energy.

Infrastructure Stocks

The infrastructure sector is poised for a substantial boost as the government aims to expedite the National Infrastructure Pipeline (NIP) project, envisioning an investment of Rs 108 trillion over five years (2020-2025). Among the stocks likely to thrive:

1. Larsen & Toubro (L&T): India’s largest engineering and construction company, for the first time crossed an order book of Rs 4 lakh crores as of June 2023. With a diversified portfolio and a strong presence in defence and renewable energy, L&T is well-positioned for upcoming opportunities.
2. IRB Infrastructure Developers: A leading road developer and operator with a commendable track record in timely execution and operational efficiency. Positioned to benefit from the government’s focus on enhancing road connectivity and asset monetization.
3. KNR Constructions: A key player in the road and highway sector with a robust order book of Rs 6,600 crore. The company is expecting Rs 2,000-3,000 crore in FY24, earlier the guidance was given ~Rs 4,000 crore but due to upcoming elections the order book revised guidance is muted. Well-equipped to bid for new projects under Bharatmala Pariyojana and state road development programs.

Defence Stocks

The defence sector is expected to receive a higher allocation to strengthen the country’s defence capabilities and reduce dependence on imports. Key stocks in focus:

1. Hindustan Aeronautics (HAL): India’s largest aerospace and defence company with a strong order book of $10 billion. Expected to secure more orders for products like Tejas, Dhruv, and Sukhoi-30MKI, with involvement in prestigious ISRO programs.
2. Bharat Electronics (BEL): Leading defence electronics company with a healthy order book of over Rs 18,000 crores. Poised to benefit from rising demand for its products from the Indian Armed Forces and export markets.
3. Bharat Forge: India’s largest auto components exporter and a significant player in the defence sector. Known for its R&D culture, the company has developed products for the defence sector and is exploring opportunities in electric mobility and green hydrogen.

Energy Stocks

The energy sector is expected to receive a boost with a focus on increasing the share of renewable energy and promoting clean fuels. Stocks to watch:

1. Adani Green Energy: India’s largest renewable energy company with a portfolio of 18 GW of operational and under-construction projects. Positioned to benefit from a favourable regulatory environment and policy support for the renewable energy sector.
2. Gujarat Gas: India’s largest city gas distribution company, set to benefit from the government’s push for natural gas in the energy basket and expanding its network and customer base.
3. Tata Power: India’s largest integrated power company with a diversified portfolio. Expected to benefit from the government’s focus on improving the power sector’s efficiency and sustainability, along with growing demand for clean energy solutions.

As the Union Budget 2024 unfolds, these stocks present promising investment opportunities, aligning with the anticipated growth-oriented and reform-driven initiatives for these critical sectors. Investors keen on capitalising on India’s economic resurgence should keep a close eye on these potential market movers.

To get the Budget 2024 live update, click here.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.