21 Stocks that will benefit from the upcoming Union Budget 2024-25; Are you holding any?

Jefferies Group is a significant player in the field of comprehensive investment banking and capital markets services. Offering a spectrum of offerings including capital markets facilitation, financial advisory services, institutional broking, securities research and asset management, the company caters to the diverse needs of clients.

According to a Jefferies report, the upcoming union budget for fiscal year 2024-2025, which is expected to be announced in July, is likely to benefit several domestic sectors such as social housing, capital expenditure, consumer goods and rate-sensitive industries.

The brokerage house is predicting a decline in bond yields, predicting that the government will target a budget deficit of 5.0% in fiscal 2025 given its ample financial scope.

Additionally, the decline in yields is expected to be supported by rising foreign portfolio investment (FPI) inflows into debt due to the inclusion of Indian Government Securities (G-Sec) in global indices and the recent improvement in India’s sovereign outlook by S&P.

However, the report also indicated that the IT and pharmaceutical sectors may not experience significant positive catalysts.

Income tax relief: Investment bank Jefferies is predicting a significant income tax relief, which could benefit the consumer sector thanks to an expected income tax cut.

According to their report, “the government’s potential fiscal flexibility, supported by robust income tax collection, could facilitate a significant (Rs 50,000 crore) reduction in income taxes.”

Jefferies elaborated that the measure could be targeted at middle-class people earning Rs 10 to 15 lakhs per annum, which would have a positive impact on companies in consumer discretionary, telecom, passenger vehicle manufacturing and consumer durables sectors. The report lists specific stocks highlighted by Jefferies.

Stocks	Current Market Price (Rs)
Jubilant FoodWorks	562
Devyani International	164
Zomato	201
FSN E-Commerce Ventures Ltd	176
Honasa consumer	433
Bharti Airtel	1,445
Dependent industries	3.131
Maruti Suzuki India	12030
CromptonGreaves Consumer Electronics	406
Havells India Ltd	1820
Hindustan Unilever	2,475
TVS Automotive Company	2364
MotoCorp Hero	5590
Mahindra and Mahindra	2868
V-Guard Industry	434

Interest Subsidy Program:

Jefferies predicts that the government will reintroduce interest rate subsidies under the loan-linked subsidy (CLSS) scheme for urban housing. This move could benefit lenders specializing in affordable housing, as listed in the table below.

Stocks	Current Market Price (Rs)
Aavas financiers	1852
Home First Finance Company India	1040
Macrotech Developers Ltd	1,540
Sunteck Realty Ltd	562

Sectoral Capex:

The capex budget is expected to increase significantly by Rs 0.3 trillion, a 20% increase year-on-year, providing certainty to contractors and capital goods companies. This development would particularly benefit Larsen and Toubro.

Rural infrastructure policies:

The cost of non-capital welfare could potentially increase by around Rs 0.5 trillion. The government health insurance program is expected to cover all senior citizens. In addition, significant improvements in rural infrastructure and welfare could benefit rural stakeholders.

“We also expect a reduction in the target amount of debt, which should be positive for interest rate-sensitive sectors such as developers and non-banking financial companies (NBFCs),” the brokerage said.

Borrowing: Jefferies also expects to reduce the debt target, which will benefit interest rate-sensitive companies such as real estate developers and non-banking financial companies (NBFCs).

Taxation and regulation:

According to Jefferies, if changes in tobacco taxation were lower than 5-7%, ITCs could benefit. However, tighter regulations in futures and options (F&O) markets could pose challenges for traders and investors in these sectors.

Written by Omkar Chitnis

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