The Union Budget 2025, presented by Finance Minister Nirmala Sitharaman, has introduced significant measures aimed at stimulating economic growth and enhancing consumer spending. Key highlights include substantial income tax cuts for the middle class, with the tax exemption threshold raised to ₹12 lakh, and a revised standard deduction of ₹75,000, making income up to ₹12.75 lakh tax-free. The budget also emphasizes agricultural development through the Prime Minister Dhan-Dhaanya Krishi Yojana, aiming to enhance productivity and support farmers. Additionally, a Nuclear Energy Mission has been announced to advance research and development in Small Modular Reactors, with an allocation of ₹20,000 crore.
Budget 2025: Stocks in Focus
The budget’s provisions have elicited varied responses from leading brokerage firms, each highlighting sectors and stocks poised to be impacted:
UBS on Budget 2025: Stocks in Focus
- Oil & Gas: UBS notes the absence of an LPG subsidy in the budget, highlighting a negative buffer of ₹29,200 crore as of December 2024. This development could adversely affect Oil Marketing Companies (OMCs), as they may need to absorb higher under-recoveries.
- Industrial & Infrastructure: The firm suggests that power equipment manufacturers are likely to outperform pure industrial companies, given the budget’s focus on energy infrastructure.
- Automobiles: Higher disposable incomes resulting from tax cuts are expected to drive demand for two-wheelers and cars, particularly in the entry and mid-level segments.
- Life Insurance: The increase in the new tax regime limit is viewed as a mild negative for life insurance companies, potentially reducing the tax-saving appeal of insurance products.
- Consumer Durables: Segments exposed to Equated Monthly Installments (EMIs), such as room air conditioners and refrigerators, are anticipated to benefit the most from increased consumer spending.
- Non-Banking Financial Companies (NBFCs): Modest growth in FY26 capital expenditure and a cut in FY25 capex are seen as marginal negatives for commercial vehicle and power financiers.
- Banks: The extension of credit guarantee coverage to more Micro, Small, and Medium Enterprises (MSMEs) is likely to aid in improving asset quality for banks.
Motilal Oswal Financial Services (MOSL) on Budget 2025: Stocks in Focus
- Capital Goods: MOSL anticipates challenges in growth for the capital goods sector, leading to a downgrade of Hitachi and Thermax to ‘Sell’.
- Consumption: Tax rate changes are viewed positively, with companies like Maruti Suzuki and IndiGo expected to benefit from increased consumer spending.
CLSA on Budget 2025: Stocks in Focus
- Capex: CLSA’s top picks in the capital expenditure segment include Larsen & Toubro (L&T), Hindustan Aeronautics Limited (HAL), NCC, and J. Kumar Infraprojects, citing favorable budget allocations.
- Industrials: The firm notes a slight negative impact for infrastructure-focused companies, including L&T and cement manufacturers, due to perceived modest capital spending hikes.
- Pharma: Changes in customs duties are seen as positive for multinational pharmaceutical companies operating in India.
- Hospitals: Improvements in the talent pool and medical tourism are viewed as beneficial for large hospital chains.
Goldman Sachs (GS) on Budget 2025: Stocks in Focus
- Automobiles: Two-wheeler manufacturers are identified as major beneficiaries, with TVS Motor Company as the top pick, followed by Hero MotoCorp, Eicher Motors, and Bajaj Auto.
- Autos: The projected 10% growth in government capital expenditure for FY26, up from 8% in FY25, is positive for Ashok Leyland.
- Cable & Wire: A 2.5x increase in allocation to the BharatNet project is seen as a positive indicator for order inflows in the cable and wire sector.
- Pipes: The extension of the Jal Jeevan Mission to FY28 is expected to benefit companies in the pipes industry.
Bernstein on Budget 2025: Stocks in Focus
- Life Insurance: Budget announcements are considered positive for SBI Life Insurance and Max Financial Services, potentially enhancing their market positions.
Jefferies on Budget 2025: Stocks in Focus
- Oil & Gas: Jefferies highlights that OMCs are set to bear the LPG subsidy burden for the first time in nine years, which could impact their profitability.
