If the RBI Keeps Cutting Interest Rates, These Stocks Could be Winners

The Reserve Bank of India (RBI) recently cut interest rates or repo rates by 25 basis points to 6%, marking its second consecutive rate cut this year.

This decision aims to stimulate economic growth amid global uncertainties, including the impact of US tariffs on India.

The repo rate is the interest rate at which the RBI lends money to commercial banks when they face a shortage of funds. If this interest rate is lowered, borrowings become cheaper, leading to growth. Debt laden companies tend to benefit as their interest outgo starts falling.

A few sectors that tend to benefit from a repo rate cut include real estate, banking and financial services, automobiles, and consumer durables.

Here are 4 stocks from some of these sectors that could gain if the RBI keeps cutting interest rates.

#1 ICICI Bank

First on the list is ICICI Bank.

When the RBI cuts the repo rate, banks can borrow money at a lower cost. This reduction in borrowing costs can lead to increased profitability if banks pass on some of these savings to customers through lower lending rates.

Cheaper borrowing costs for banks can translate into lower interest rates for consumers, potentially increasing demand for loans. This can boost banks' loan portfolios and revenue.

ICICI Bank is likely to be a big beneficiary of repo rate cuts, given the size of the bank. In the last 3-years, ICICI Bank has seen its profitability grow at a compounded annual growth rate (CAGR) of 34%.

Also, the asset quality of the bank has been improving over the last few years. In fact, net NPAs at the bank have dropped from 1.4% as of March 2020, to 0.42%, at the end of December 2024.

Going ahead, ICICI Bank plans to expand its international footprint by strengthening its presence in countries where it already operates, such as Singapore, Bahrain, Hong Kong, Dubai, and South Africa.

The stock of the bank has remained resilient in a falling market. The stock is not too far from its 52-week high of Rs 1,372.

Given ICICI Bank's strong brand equity, solid financials when compared to peers, and rapid expansion plans, investors can add this stock to their watch list.

For more details, see the ICICI Bank fact sheet and quarterly results

#2 Godrej Properties

Next on the list is Godrej Properties.

Godrej Properties is another stock that is set to be a beneficiary of repo rate cuts. Real estate companies like Godrej Properties could see increased demand for residential and commercial properties due to more affordable home loans.

Apart from this, it will also benefit from lower interest rates on loans on its books.

Godrej Properties has been growing rapidly over the last few years. The company acquired 12 land parcels between April and December 2025, which are set to facilitate residential projects worth approximately Rs 234.5 billion (bn). These acquisitions cover a total estimated saleable area of 16.9 m sq. ft.

The company's booking value for FY25 reached Rs 294.4 bn, marking a 31% increase from the previous year. This achievement represents 109% of its annual guidance, demonstrating robust demand and strong market performance.

The company has also been reporting a stellar set of results. Net profits at the company have grown at a CAGR of 22.22% since 2020. Net profits which were placed at Rs 2,739 m in FY20 has surged to Rs 7,471 m in FY24.

The shares of Godrej Properties have fallen in line with the markets. The stock which hit a 52-week high of Rs 3,400 on 16 July 2024 and is down more than 40% since.

Given the recent repo rate cuts, robust growth and strong pedigree the stock can be added to your watch list.

For more details, see the Godrej Properties fact sheet and quarterly results

#3 Voltas

Next on the list is Voltas.

Lower interest rates can increase consumer spending on big-ticket items, benefiting companies like Voltas, which is the largest air conditioning company in India.

Apart from repo rate cuts, the company will also benefit from higher disposable income, thanks to the Union Budget 2025, which slashed income tax rates exponentially.

Voltas is the largest air conditioning brand in India. It offers products like air conditioners, air coolers, water dispensers, and refrigerators. Besides unitary cooling products, engineering services and Voltas Beko are other divisions of the company.

Voltas is rapidly expanding and growing its business which should augur well for the company. The company has set up a new production facility in Chennai with a capital expenditure of Rs 4 bn. This facility is expected to reach peak utilisation by FY26.

Voltas is also focusing on increasing its market share in the air conditioner segment by prioritising volume growth over margins. The company has seen significant gains in market share, reaching around 20.5% in the AC market.

It also continues to execute large-scale international projects, such as those in the UAE, and is looking to expand its global presence further.

The company is also strengthening its Voltas Beko brand, which offers a range of home appliances. This includes investments in brand building and advertising to increase market presence.

However, one pertinent fact to highlight is that the company's performance over the years has been subdued. Net profits at Voltas which were at Rs 5,211 m in FY20 have dropped to Rs 2,482 in FY24. The last few quarters at the company have been much better when compared to 2023.

The shares of the company have dropped sharply from 52-week highs of Rs 1,946 by 34%.

While repo rate cuts are likely to benefit the company going forward, the long-standing track record and expansion also augur well.

For more details, see the Voltas fact sheet and quarterly results

#4 Hyundai Motor India

Next on the list is Hyundai Motor India.

With the repo rate already cut by 50 basis points since the start of the year, it is likely that auto loan interest rates could fall. Lower EMIs due to reduced interest rates can influence buying decisions, especially in price-sensitive segments like auto.

This can be a boost for auto companies like Hyundai Motor India. The company offers a wide range of vehicles in India, including the Hyundai Creta, Hyundai Venue, Hyundai i20, Hyundai Verna, and Hyundai Grand i10 Nios.

The company is expanding rapidly. Hyundai has allocated Rs 320 bn for expansion between 2023 and 2032, aiming to increase its annual production capacity from 824,000 units to 1.1 million units by 2028.

Hyundai plans to launch new models and platforms, focusing on electric vehicles and SUVs. The company will introduce four EVs in the future, including the Hyundai Creta Electric, targeting the mass market EV segment.

In the last few years, Hyundai Motor India has seen very rapid growth. Sales at the company has jumped from Rs 432,755 m in 2020 to 698,291 m in FY24.

For the quarter ending 31 December 2024, the company reported sales of Rs 166,480 m, while net profits were at Rs 11,607 m.

Shares of Hyundai Motor have dropped significantly, when compared to the IPO price. The company's shares were listed in October 2024 with the IPO price set at Rs 1,960. The stock now trades at Rs 1,592, showing a drop of nearly 20%.

This is another stock to look at, given the strong brand equity and solid track record.

For more details, see the Hyundai Motor fact sheet and quarterly results.

Conclusion

The cut in repo rates, will lower EMIs and interest rates make borrowing more manageable. This can lead to increased spending and investment, benefiting the broader economy.

Companies in select sectors are likely to benefit from a cut in interest rates by the RBI. Banks are likely to begin cutting interest rates on loans sometime later. If there are a few more repo rate cuts by the RBI, it is almost certain that interest rates would drop sharply.

However, banks must cut rate on loans and transmit the repo rate cuts to the final consumer. If the transmission does happen, there could be a boost to demand and better corporate performance going forward.

Investors should evaluate the company's fundamentals, corporate governance, and valuations of the stock as key factors when conducting due diligence before making investment decisions.

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...