10 largecaps stocks which stand to gain from the Budget.
The FY26 Union Budget marked a shift in the government stance towards consumption from its earlier focus on capital expenditure.
However, the move to boost demand and counter the economic slowdown through tax relief is being done without sharp cuts in capex or veering away from the fiscal glide path.
The key takeaway, however, was the hike in tax free threshold to Rs 12.75 lakh under the new tax regime.
This is expected to infuse Rs 1 trillion in the hands of the middle class, driving demand, boosting consumption and to an extent, savings.
Though the infra indices did not take kindly to the lower allocation for the rail and road sectors, brokerages point out that the two segments saw significant investments over the four years.
Largecaps remain the preferred investments for most brokerages.
While Nifty is trading at 19.9 times (3 per cent below its long period average) on a one-year forward basis, the Nifty Midcap is at 30 times (49 per cent premium to the Nifty) and Nifty Smallcap is trading at 22 times (9 per cent premium to the Nifty), points out Motilal Oswal Research.
Here are 10 largecaps stocks which stand to gain.
Trent
- Raising the tax exemption threshold will boost disposable income and aid in consumption recovery, especially in urban centres, where demand has been a challenge
- Motilal Oswal Research expects the Tata group firm to continue its significant outperformance as compared to retail peers driven by robust store additions in Zudio
- Given the strong revenue outperformance, Trent is expected to register the highest growth (37 per cent) among Nifty companies during FY24-26
Titan Co
- Unchanged Customs duty on gold and silver imports is favourable for jewellery firms such as Titan
- Over Rs 1 trillion boost to the economy by way of personal tax benefits is expected to enhance disposable income and spur consumption
- Most brokerages believe that the move of revised tax slabs will be a bigger positive for discretionary segments, as compared to staples
- Antique Research is positive on the jewelry, eyewear and watches maker, and believes that its strong brand saliency across categories
- The share price of this Tata group firm was up 1.8 per cent on Saturday
Maruti Suzuki India
- India s largest passenger vehicle maker will be a major beneficiary of the move to restructure tax slabs and enhance disposable income of individuals
- New launches over the next year and a half, which will include electric vehicles and hybrids, are expected to drive volumes
- Its tech-agnostic approach (internal combustion engines, hybrids, compressed natural gas and electric vehicles) keeps the company well-positioned to cater to changing customer preferences
ICICI Bank
- ICICI Bank is likely to be an indirect beneficiary of the Income Tax rebate provided in the Budget
- The cut in Income Tax is likely to boost retail lending, especially for big ticket purchases such as personal vehicles, consumer durables and homes
- The proposal is positive given that it is one of India s biggest retail lenders
- The impact on corporate and project loans of banks remains uncertain given a modest growth in government capex and lack of specific measures for the corporate sector, but the intention of maintaining fiscal discipline is positive for banking
- ICICI Bank s stock reacted positively to the proposals and ended with gains of 0.21 per cent on Saturday
SBI
- Brokerages expect SBI, the country's largest lender, to be one of the top beneficiaries of the Budget proposals
- According to Motilal Oswal Securities, the Budget signals a shift in focus to consum pt ion and savings from capital expenditure
- A pick in consumption demand due to the cut in Income Tax is likely to benefit SBI s retail banking operations, while a boost in savings from higher post-tax in the hands of the salaried will translate into higher saving and terms deposit for the bank
- SBI s stock was down 0.91 per cent on Saturday, compared to 0.16 per cent decline in Bank Nifty
Bharti Airtel
- The compensation to service providers for creation and augmentation of telecom infrastructure has increased and is positive for telecom players
- The revised tax rate structure is sentimentally positive for the telecom sector as this improves the customer affordability to absorb the future tariff hikes, believe brokerages
- Tariff hikes in the Indian wireless business are likely to be more frequent given the consolidated industry structure, and higher ARPU requirement for Jio to justify its significant 5G capex
Larsen and Toubro
- While the Budget has no major boost in infra capex, sectors like road, highways, railways, defence and others have been allocated RS 11.2 trillion for FY26
- Total allocation for FY26 capex is up 10.1 per cent over FY25 revised estimates but almost flat over Budget estimates for FY25
- Larsen & Toubro (L&T), India's largest construction and engineering company, is seen as a beneficiary of infra spending
- However, any slowdown or delays in ordering/capex could weigh on the company s order book and on core earnings
Havells India
- The cut in personal income tax for individuals is expected to increase disposable income and potentially boost demand for consumer durable products, thus, firms such as Havells
- Havells is a leading fast moving electrical goods company, and makes a wide range of electrical and consumer products
- Analysts at JM Financial said that Havells strong distribution, focus on fresh investments in team and brand building and in house manufacturing should continue to aid market share gain in the near to medium term
Bajaj Finance
- As the country s largest non-banking retail lender, Bajaj Finance is likely to be a prime beneficiary of the Budget s emphasis on boosting consumer demand in the economy
- This will boost demand for Bajaj Finance s retail loans used by consumers to finance consumer goods such as home appliances and personal vehicles
- A rise in post tax income is also likely to moderate delinquencies or bad loans in retail credit, which has been a cause of concern for the lender
ITC
- No tax hike on cigarettes, which is ITC s cash cow, and accounts for 74 per cent of its profit before tax, is positive
- The move to reduce tax up to an income of Rs 12 lakh, and measures for the rural economy are expected to boost consumption
- With stability in taxes and backed by deterrent actions by enforcement agencies on illicit trades, cigarette business is well placed for healthy volume growth
- The demerger of its hotel business will enhance ITC s cash flows in the near term
Note: TTM is trailing-12-months; CMP: Current market price; revenues for SBI & ICICI Bank is net interest income
Source: Bloomberg, Capitaline; Compiled by BS Research Bureau
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Feature Presentation: Aslam Hunani/Rediff.com
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