Budget 2024 Let You Down? Check Out these 30 Stocks that Could Benefit Big

The Union Budget 2024 unveiled a bold vision for India's economic future, blending ambition with strategic investment across multiple sectors.

The finance minister, Nirmala Sitharaman, laid down a comprehensive framework to fuel growth and development.

Focussing on critical areas such as infrastructure, agriculture and technological innovation, this year's budget not only addresses immediate economic needs but also sets the stage for long-term prosperity.

Let's delve into how the key measures that will impact various sectors and steer India towards its economic goals.

#1 Infrastructure

First on our list is infrastructure.

The government has continued its thrust on infrastructure, maintaining a strong commitment to bolstering economic growth. The Union Budget 2024 has kept infrastructure spending steady at Rs 11 trillion (tn) (3.4% of GDP), up 16% from FY23.

This steady allocation eases concerns about policy continuity, a major worry among investors, given the coalition government.

The government's push for rural development is noteworthy, with the PMGSY-IV plan to provide all-weather connectivity to 25,000 rural habitations, expanding the rural road network.

The Rs 260 billion (bn) highway project, coupled with Rs 115 bn worth of irrigation projects in Bihar, is poised to enhance road connectivity significantly.

This will create new opportunities for construction firms and boost demand for cement companies.

This development is promising for players like NCC, PNC Infratech, Ambuja Cement, ACC, and Ultratech Cement.

Infrastructure Companies Financial Snapshot (2023-24)

	Revenue (Rs m)	Operating Margin (%)	Return on Equity (%)	P/BV
NCC	2,08,450	8.0%	11.4%	29.0
PNC Infratech	86,500	23.0%	19.2%	14.5
Ambuja Cement	3,31,600	19.0%	10.3%	49.8
ACC	1,99,590	15.0%	14.2%	22.8
Ultratech Cement	7,12,410	18.0%	12.2%	47.0

Source: Equitymaster

The budget also highlights significant spending on tourism, which will boost cement demand and infrastructure.

Key projects include the development of iconic tourist destinations like Vishnupad and Mahabodhi Temples, the comprehensive development of Rajgir and the revival of Nalanda as a tourist center, leveraging India's rich spiritual heritage.

Given the substantial spending, the government has allocated Rs 1.5 tn for long-term, interest-free loans this year to assist states with resource allocation.

#2 Real Estate

Next on our list is real estate.

The Union Budget 2024 delivered a significant blow to the real estate sector with the abrupt removal of indexation benefits on long-term capital gains (LTCG) from July 23rd onwards.

Previously, property owners could offset the impact of inflation on their capital gains, resulting in lower tax liabilities. This concession has now been eliminated.

While the LTCG tax rate has been reduced from 20% to 12.5%, the removal of indexation will, in many cases, increase the overall tax burden for those selling properties.

This bold move aims to discourage real estate investments as a pure financial asset and potentially cool down property prices.

However, it may also create challenges for genuine homebuyers seeking to upgrade or downsize their residences.

Real Estate Companies Financial Snapshot (2023-24)

	Revenue (Rs m)	Operating Margin (%)	Return on Equity (%)	P/BV
Sobha	30,970	9.0%	2.0%	7.8
Prestige Estates	78,770	32.0%	12.9%	6.7
Godrej Properties	30,360	-4.0%	6.8%	8.7

Source: Equitymaster

Real estate developers are likely to be affected by this change, as it could impact buyer sentiment and purchasing decisions.

Companies in the sector include Sobha, Prestige Estates, Sunteck Realty and Godrej Properties.

#3 Consumer Discretionary

Third on our list is consumer discretionary.

In Union budget 2024, the government refrained from increasing tobacco taxes. While this was a boon for ITC, the broader FMCG industry has been grappling with sluggish consumer demand, particularly in rural areas, due to rising income inequality and inflation.

The budget's focus on rural development and agriculture is seen as a positive step to revitalise consumption.

Allocations of Rs 2.7 tn for rural development and Rs 1.52 tn for agriculture, coupled with increased minimum support prices for crops, aim to boost rural incomes.

These measures are expected to benefit both FMCG and auto companies, especially those targeting the rural market with entry-level vehicles and products.

The top companies with large exposure to rural include HUL, Varun Beverages, Hero Moto, Mahindra & Mahindra, and Maruti Suzuki.

FMCG Companies Financial Snapshot (2023-24)

	Revenue (Rs m)	Operating Margin (%)	Return on Equity (%)	P/E
ITC	7,08,660	37.0%	28.4%	30.2
HUL	6,21,070	24.0%	20.3%	61.8
Varun Beverages	1,64,670	23.0%		96.8

Source: Equitymaster

Automobile Companies Financial Snapshot (2023-24)

	Revenue (Rs m)	Operating Margin (%)	Return on Equity (%)	P/E
Hero MotoCorp	3,77,890	14.0%	22.0%	28.7
Mahindra & Mahindra	13,90,780	18.0%	18.4%	30.9
Maruti Suzuki	14,18,580	13.0%	18.3%	29.1

Source: Equitymaster

The Union Budget 2024 introduced several measures aimed at boosting urban consumption and employment, further stimulating consumption.

These include a reduction in direct tax rates, resulting in potential savings for taxpayers, direct benefit transfers to organised sector employees, incentives for employers to hire new staff, and increased funding for affordable housing under the PM Awas Yojana Urban 2.0 scheme.

Companies like Zomato, Jubilant Food, Avenue Supermarts (DMART) and Devyani are expected to be among the beneficiaries of increased consumer spending.

Consumer Discretionary Companies Financial Snapshot (2023-24)

	Revenue (Rs m)	Operating Margin (%)	Return on Equity (%)	P/E
Zomato	1,21,140	0.0%	1.8%	562
Jubilant FoodWorks	56,540	20.0%	12.4%	147
Avenue Supermarts	5,29,930	8.0%	14.6%	127
Titan	5,10,840	10.0%	32.9%	88
Kalyan Jewellers	1,85,480	7.0%	15.2%	102

Source: Equitymaster

Overall, the budget's measures to support the rural economy and boost disposable incomes have created a positive outlook for the FMCG and auto sectors.

The government also reduced customs duty on gold, from 15% to 6%. This bold move is expected to significantly benefit the jewellery sector as lower import duties will lead to decreased gold prices for manufacturers. This will likely be passed on to consumers, thereby boosting affordability.

Consequently, this could stimulate demand for gold jewellery, especially during peak seasons like festivals and weddings.

Organised jewellery retailers are poised to gain a competitive edge due to their established supply chains and brand reputation.

Lower gold prices may attract more consumers towards organised retail, potentially increasing their market share. While short-term profit margins might be affected by reduced gold prices, the overall increase in sales volume is expected to enhance profitability for these retailers.

The top players in the industry include companies like Titan, Kalyan Jewellers, etc.

#4 Financial Services

Fourth on the list is financial services.

The Union Budget 2024 has dealt a significant blow to the financial services sector, particularly impacting stock exchanges, brokers and wealth managers.

The steep increase in Securities Transaction Tax (STT) on derivatives is expected to deter trading activity, thereby reducing revenue for these intermediaries.

The budget has provided a significant fillip to affordable housing finance companies.

The renewed emphasis on the PM Awas Yojana Urban 2.0, with a dedicated allocation of Rs 2.2 tn over the next five years, is a major boost for the sector.

This substantial financial commitment, coupled with provisions for interest subsidies, is expected to fuel growth and expand the customer base for these companies.

The overall aim of creating affordable housing for 10 m urban poor and middle-class families, with a total investment of Rs 10 tn, positions these companies to play a pivotal role in achieving this ambitious target.

This policy push is likely to enhance the business prospects of affordable housing finance companies, enabling them to cater to a larger segment of the population and contribute to the government's housing for all initiative.

The top players include Aadhar Housing, Aavas Financiers, Aptus Value Housing, Housing & Urban Development Corporation (HUDCO), and Home First Finance.

Financial Services Companies Financial Snapshot (2023-24)

	Revenue (Rs m)	Return on Equity (%)	P/E
Aadhar Housing	25,870	18.4%	NA
Aavas Financiers	20,180	13.9%	3.7
Aptus Value Housing	13,650	17.2%	4.2
Housing & Urban Development Corporation (HUDCO)	77,840	13.2%	3.8
Home First Finance	11,570	15.5%	4.4

Source: Equitymaster

#5 Metals and Mining

Last on the list are metals and mining.

The government's strong focus on boosting domestic production and processing of critical minerals is a game-changer.

By eliminating basic customs duty on key inputs like ferro nickel, blister copper and extending zero duty on ferrous scrap and nickel cathode, the budget has significantly reduced production costs for steel and copper companies.

Companies like Tata Steel, JSW Steel, Vedanta and Hindustan Copper are some of the top players in the metals and mining sector. Players in the recycling sector include Gravita India, Pondy Oxide, etc.

Metals and Mining Companies Financial Snapshot (2023-24)

	Revenue (Rs m)	Operating Margin (%)	Return on Equity (%)	P/BV
Tata Steel	22,91,710	10.0%	6.6%	2.2
JSWSteel	17,57,360	15.0%	11.8%	2.8
Vedanta	14,37,270	25.0%	10.5%	5.2
Hindustan Copper	17,170	32.0%	13.5%	13.2

Source: Equitymaster

The emphasis on increasing domestic production, recycling and overseas acquisition of critical minerals such as lithium, copper, cobalt, and rare earth elements underlines India's strategic intent to reduce import dependency.

This move is crucial for sectors like nuclear energy, renewables, space, defence, telecommunications, and electronics.

The broader reduction in basic customs duty for 25 critical minerals will further stimulate domestic refining and processing capabilities, creating a robust and self-reliant metals and mining ecosystem.

In Conclusion

The Union Budget 2024 stands as a decisive roadmap for India's economic future. By making substantial investments across infrastructure, agriculture, manufacturing, and technology, the government has set the stage for robust growth.

While there are still hurdles to overcome, the emphasis on inclusive and sustainable development is notable. The real test will be in how these policies translate into concrete results.

As India progresses, the effectiveness of implementation and oversight will be crucial in realising the budget's ambitious goals and driving long-term economic success.

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