Budget 2022: L&T, UltraTech Cements, DLF among top 20 stocks to buy post-budget, say Experts

Finance Minister Nirmala Sitharaman delivered a pragmatic growth-oriented Budget 2022 to boost growth in Asia’s third-largest economy.

The highlight of Budget 2022 was increase in the capital expenditure outlay by around 35 per cent to Rs 7.5 lakh crore in the financial year 2022-23, and FY23 effective CAPEX is seen at Rs 10.7 lakh crore. In comparison, the CAPEX target in FY22 was set at Rs 5.5 lakh crore.

Higher capital expenditure by the government will put many economy-related as well as consumption sectors in focus, suggest experts. The government announced critical investments and policies for infrastructure development via railways, metro systems, highways primarily through the PM Gati Shakti initiative.

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“This is a Capex boosting budget, which is prudent in other expenditures as the FM looks to contain the fiscal spending while enhancing growth. Therefore, the FM has increased the Capex investment target by 35% to 7.5 lac crore,” Sonam Srivastava, Founder, Wright Research, said.

“Railway and Logistics-linked stocks, Capital Goods, Cement, and Real Estate will gain with this,” she said. FM has focused on Fintech instead of Banking, Electric Vehicles, and Edtech instead of Education, which has brought back focus to the new-age innovative sectors, added Srivastava.

Indian market gave a thumbs up to Budget 2022 as benchmark indices rallied more than 1 per cent on Budget Day. Most sectors closed the day in the green barring oil & gas, auto, and telecom stocks.

The government presented a progressive budget that laid down the foundation of ensuring long term economic growth. It continued with its policy of fiscal prudence and pegged FY22 fiscal deficit at 6.9% while setting a target of 6.4% for FY23 which got a thumbs up from market participants.

The action on D-Street is likely to remain volatile and the movement will be stock specific, suggest experts. Roop Bhootra, CEO, Investment Services, Anand Rathi Shares, and Stock Brokers said Capital Goods, Infrastructure, Technology, Digital, Defence and logistics stocks to outperform.

Ashis Sarangi, SEBI registered RIA, Pickright Technologies highlighted that ahead of the Budget 2022 they increased exposure to infra, banks, PSU banks, and power via L&T, IRB, PSU Bank BEES, ICICI Bank, and HDFC Bank.

We have collated a list of top 20 stock ideas from experts that investors can buy post Budget 2022:

Expert - Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services Ltd

L&T:

The Union Budget has raised its allocation for capital expenditure to Rs 7.5 lakh crore in 2022-23, up from Rs 5.5 lakh crore in 2021-22.

The government believes the public investment will be necessary to support private investment that will in turn create demand. This will be positive for a company like LT. L&T remains the best play on a capex cycle in India.

UltraTech Cement:

The budget has allocated 480bn for a housing plan, including affordable housing, in urban and rural areas.

UltraTech Cement is in a strong position to gain market share, led by its strong distribution network given government’s thrust on Infrastructure development and recent improvement in housing demand.

DLF:

The government announced the completion of 80 lakh homes to come up by 2023 under the Pradhan Mantri Awas Yojana and allocation of Rs 480bn under PMAY urban and rural.

These announcements are expected to help boost the affordable housing market. This is positive for DLF given its strong momentum in both sales bookings and deal additions.

Bharti Airtel:

India will conduct auction of airwaves to ensure telecom operators can launch 5G network by 2023. The government also announced fund allocation to ensure the reach of faster broadband in rural areas.

Bharti’s superior execution quality and consistent subscriber and revenue market share gain will benefit the company.

IRCTC:

India will run 400 new, energy-efficient Vande Bharat trains in the next three years. The railway sector will also see 100 Gati Shakti Cargo terminals, which will be developed in the next three years.

With an eye on farmers, the rail sector will also develop “One Station One Product”, which will leverage local produce carried on the railways. This is positive for IRCTC.

Can Fin Home:

The budget has allocated 480bn for a housing plan, including affordable housing, in urban and rural areas. Can Fin has a strong presence in the small and affordable housing space, coupled with a healthy balance sheet, we expect it to be a big beneficiary.

BEL:

The government has announced 68% of capital for the defence sector to be allocated to the domestic industry in 2022-23. It’s also set aside 25% of its budget in defence research and development (R&D) for collaborating with the private industry.

BEL is well-positioned to benefit from rising defense expenditure, aided by: a) a strong manufacturing base and execution track record, b) its relationship with defense and government agencies, d) its in-house R&D capabilities and e) its higher focus on exports to friendly countries.

Expert: Anuj Jain, CA, Co-founder and Research Head of Green Portfolio Private Limited

Titagarh Wagons & Adani Enterprises:

68% of capital procurement budget for defense will be earmarked for the domestic industry for 2022-23 up from 58% in 2021-22 – Key players to watch out for Adani Enterprises (for their guns/rifles units and aerostructure unit, Titagarh Wagons – for their shipbuilding unit which executing Navy and coast guard orders.)

400 new generation Vande Bharat trains in next 3 years - (Titagarh Wagons is into metro coaches. According to us it is the only listed entity involved in metro coaches manufacturing.).

KNR Construction:

Five DPR of river linking, have been finalized. Big for players like KNR construction which is a good player that could benefit the most.

Vindhya Telelinks & Sterlite Technologies:

Bharatnet project - Contracts to connect all villages and remote areas in 2022-23 with target completion of 2025. (Vindhya tele and Sterlite are potential beneficiaries.)

Expert: Sonam Srivastava, Founder, Wright Research

Infrastructure Stocks - Container Corporation of India, IRB Infra, Dilip Buildcon, Allcargo Logistics

The biggest gainers post-budget will come from the infrastructure-linked sectors and new-age companies.

Container Corporation of India, IRB Infra, L&T, Dilip Buildcon, Allcargo Logistics, Oberoi Realty, India Cements, Ultratech, Honeywells, and Tata Steel.

Tata Power, Amara Raja Borosil Renewables and Adani Green:

Tata Power, Amara Raja, Borosil Renewables, Adani Green are likely to benefit the most from the announcement made on EV theme.

The Finance Minister said that in view of the lack of space in the cities, the government would focus on promoting the battery swapping facility. For this, the government will come up with a battery swapping policy.

The new policy is an attempt to encourage the usage of electric vehicles, part of a larger plan to achieve the subcontinent's decarbonisation goals.

(Disclaimer: The views/suggestions/advice expressed here in this article are solely by investment experts. Zee Business suggests its readers to consult with their investment advisers before making any financial decision.)