As we approach Budget 2024, investors are focusing on key sectors that could profit from new policies and budgetary allocations. Railway, defence, agriculture, infrastructure, electric vehicles (EV), and MSME (Micro, Small, and Medium Enterprises) and others are expected to be prioritized.
These sectors have been chosen for their ability to stimulate economic growth and offer job opportunities. Here are some equities from these industries that investors should keep an eye on ahead of the budget announcement.
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Railway Sectors
The Indian railway sector has traditionally played an important role in the country’s transportation infrastructure, with a substantial economic impact. In the Interim Budget for 2024-2025, the government gave a significant Rs 2.55 lakh crore to Indian Railways, representing a 5.8% increase over the previous year.
This large financial boost has strengthened investor confidence, resulting in notable gains in railway-related equities, several of which have grown by double digits in the last year.
For Example,
- RITES Ltd, formerly known as Rail India Technical and Economic Service Limited, is a notable Navaratna central public sector organization that reports to India’s Ministry of Railways.
- Market capitalization: ₹16,974 cr.
- Current price is ₹706
- P/E ratio of 37.3.
- Book value: ₹109.
- Titagarh Rail Systems Ltd was founded in 1997 and specializes in the manufacturing and sale of freight wagons, passenger coaches, metro trains, and other railway equipment. The company serves both domestic and export markets.
- Current price is ₹1,610.00 (as of June 24, 2024).
- Market capitalization: ₹21,680 Cr.
- Stock P/E ratio: 75.2.
- Book Value: ₹166.00
- The Indian Railway Finance Corporation Ltd is a public-sector company under the Ministry of Railways. The corporation borrows money from the financial markets to fund the acquisition and development of assets, which are then leased to the Indian Railways.
- Current price is ₹177.00 (as of June 24, 2024).
- Market capitalization: ₹2,31,143 cr.
- Stock P/E: 36.0
- Book Value: ₹37.6
- Rail Vikas Nigam Ltd is a government of India undertaking that implements several types of railway infrastructure projects.
- Current price is ₹417.00.
- Market capitalization: ₹86,862 Cr.
- Stock P/E ratio: 59.4
- book value: ₹37.7.
Defence Sectors
Defence sector stocks in India comprise enterprises that manufacture or offer defence-related equipment, technology, and services. These stocks have a huge impact on the economy and the stock market.
Investors frequently regard defence equities as safe investments because to their consistent demand, strong government support, and long-term contractual arrangements. These features make defence stocks a dependable option for people seeking solid and secure investments.
For Example,
- HAL manufactures aircraft and helicopters and offers replacement parts for them. They also repair and maintain airplanes. The firm is a key supplier to the Indian defence sector.
- Current stock price is ₹5,325.
- Market capitalization: ₹3,56,264 crore.
- P/E: 46.9
- Book value is ₹434.
- Paras Defence and Space Technologies Ltd. is a privately held firm that designs, develops, manufactures, and tests defence and space engineering products and solutions. It is listed on the National Stock Exchange of India with the ticker symbol PARAS.
- Market capitalization: ₹5,469 crore.
- Current price: ₹1,402;
- P/E ratio: 182.
- Book value: ₹114
- Mazagon Dock Shipbuilders Limited (MDL) is an important shipyard in India, founded in 1774. It produces warships, submarines, cargo and passenger ships, and offshore platforms. It has built more than 800 vessels since 1960. It manufactures mostly for the defense industry.
- Market capitalization: ₹79,975 Cr.
- Current price: ₹3,965
- P/E Ratio: 41.3
- Book value: ₹310.
Agriculture stocks
Agriculture stocks are investments in companies that engage in various elements of the agricultural industry, including as farming, seed production, fertilizer and pesticide manufacturing, machinery, food production, and associated operations.
These stocks provide investors with the potential to gain from the growth and profitability of these companies, which are directly related to the performance of the agriculture industry.
Investing in agriculture equities allows investors to diversify their portfolios and capitalize on the rising demand for agricultural products as a result of population increase, changing diets, and the need for sustainable food supply. This sector is critical to many global economies, providing a solid platform for prospective investment benefits.
For Example,
- UPL Ltd. is a significant supplier of agricultural products, such as crop protection chemicals, industrial chemicals, and specialty chemicals.
- Current stock price is ₹572.
- Market capitalization: ₹42,946 crore.
- P/E ratio: not provided.
- Book value is ₹370.
Infrastructure
Infrastructure stocks are shares of corporations involved in a variety of industries critical to economic development, including engineering, procurement, and construction (EPC), roads and highways, thermal energy and transmission, transportation, logistics, and warehousing.
These companies are critical in developing and maintaining the infrastructure required for a rising economy, such as roads, bridges, power plants, transportation networks, and housing developments.
With the Indian government’s emphasis on infrastructure development, these stocks have gained traction since they reflect progress and investments in critical industries that drive economic growth and sustainability.
For Example,
- NCC Limited was founded in 1978 and specializes in turnkey EPC and BOT projects through Public-Private Partnerships. The corporation constructs roads, buildings, irrigation, and other infrastructure projects.
- Current price: ₹322
- Market capitalization: ₹20,220 cr.
- Stock P/E ratio: 27.6;
- book value: ₹106.
- NBCC (India) Ltd is a Navratna Enterprise of the Ministry of Housing and Urban Affairs. The company has three key business segments: project management consultancy, engineering procurement and construction, and real estate.
- Current price is ₹163.00.
- Market capitalization: ₹29,340 crore.
- Stock P/E ratio: 55.0.
- Book value: ₹12.4.
EV
With increased environmental awareness, India, the world’s third-largest auto market, is actively encouraging electric vehicle (EV) adoption. The government regards electric mobility as a critical method for reducing emissions and improving air quality, with a target of 30% EV uptake by 2030.
This effort has fueled the growth of India’s electric car sector, which has been aided by favorable legislation such as the Electric Mobility Promotion Scheme (EMPS) 2024. These programs have greatly increased the country’s electric car shares and investments, indicating a considerable shift toward sustainable transportation options.
For Example,
- HCL is involved in a variety of operations, ranging from copper mining to the final stage of processing copper into saleable products.
- Current stock price is ₹332 (as of June 24, 2024).
- Market capitalization: ₹32,105 Cr.
- P/E ratio: 109.
- Book value is ₹23.6
- Bharat Heavy Electricals Limited is an integrated power plant equipment manufacturer that designs, manufactures, and services a diverse variety of products for power, transmission, transportation, and other industries. It is owned and controlled by the Indian government.
- Current price is ₹295.00 (as of June 24, 2024).
- Market capitalization: ₹1,02,616 crore.
- Stock P/E: 364
- Book value: ₹70.2.
MSME
Micro, Small, and Medium Enterprises (MSMEs) play an important part in India’s export environment, accounting for over 45% of total exports. This industry accounts for around 38% of India’s manufacturing output.
Beyond economic contributions, MSMEs are critical for job creation, employing over 110 million people and ranking as the largest employer behind agriculture, which employs over 148 million people. These businesses are the backbone of India’s economy, fueling growth, innovation, and job creation across multiple industries.
For Example,
- Athena Global Technologies Ltd is in the business of software development and consulting, as well as real estate activities.
- Market capitalization: ₹157 cr.
- Current price: ₹112
- P/E ratio: 0.76.
- Book value: ₹141.
Green Energy
The global shift toward green energy is gaining traction, notably in India, where ambitious goals include generating half of the country’s electricity from non-fossil fuel sources by 2030 and reaching net-zero emissions by 2070.
The Union Budget 2023-24 focuses on sustainable development, reflecting the government’s commitment to projects such as LiFE (Life for Environment), which the Prime Minister champions.
This vision has fuelled considerable growth in India’s renewable energy sector, with over 15 equities rising by more than 100% in the last year. Companies across India are aggressively pursuing renewable energy programs to fit with environmental aims and contribute to a cleaner future.
For Example,
- Adani Green Energy Ltd is a holding company for many businesses within the Adani Group that operate in the renewable power production business, with a primary focus on renewable power generation and related activities.
- Current stock price is ₹1,812
- Market capitalization: ₹2,87,082 Cr.
- P/E ratio: 227.
- Book value: ₹47.3.
Bank sector
Bank sector stocks are investments in businesses that provide financial services such as commercial banking, investment banking, and insurance. These prominent private sector banks in India offer a variety of financial products, including deposits, loans, and investment services.
The performance of these banking equities is inextricably linked to the overall state of the economy and stock market. They include small-cap, mid-cap, and large-cap banks, which play an important role in providing liquidity to businesses and individuals, so significantly contributing to the financial ecosystem.
For Example,
- Kotak Mahindra Bank Ltd is a diversified financial services group that provides a wide range of banking and financial services products such as Retail Banking, Treasury and Corporate Banking, Investment Banking, Stock Broking, Vehicle Finance, Advisory Services, Asset Management, Life Insurance, and General Insurance.
- Current stock price is ₹1,773
- Market capitalization: ₹3,52,374 Cr.
- P/E Ratio: 19.4
- Book value: ₹563.
Cement Sector
Cement companies such as UltraTech Cement, ACC, Ambuja Cement, Dalmia Bharat, and Shree Cement are gaining traction before the interim Budget. These inventories have surged by 20-40% over the last year, owing to increasing demand following the COVID recovery.
The increase in demand is linked to government spending and a rebound in the housing sector, which will result in increased sales and prices throughout fiscal year 2024. Analysts expect higher margins due to lower input costs, particularly for critical raw commodities such as pet coke and coal.
For Example,
- UltraTech Cement Ltd is a major producer of Portland cement in India. It manufactures and sells cement and cement-related products, principally in India.
- Current stock price: ₹10,786
- Market capitalization: ₹3,11,389 Cr.
- P/E Ratio: 44.1
- Book value: ₹2,086
Healthcare Sector
The Indian healthcare sector is preparing for potential changes in the approaching Budget 2024, with an emphasis on regional healthcare improvements and initiatives to increase its global position as a pharmaceutical hub.
The Indian Pharmaceutical Alliance, which represents leading pharma manufacturers in India, has proposed that the 2024 Budget prioritize boosting life-sciences innovation and R&D. They have ambitious targets for the sector, aiming for a market size of $120–130 billion by 2030 and $400-450 billion by 2047, compared to the current domestic pharma market size of approximately $50 billion.
For Example,
- Fortis Healthcare Ltd. is one of India’s top comprehensive healthcare service providers. The organization provides healthcare delivery services in India, Nepal, Dubai, and Sri Lanka through 36 healthcare institutions totaling around 4,000 operating beds.
- Current price: ₹485
- Market capitalization: ₹36,615 cr.
- Stock P/E: 62.3,
- Book Value: ₹102.
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Conclusion
Some sectors, such as railways, defense, agriculture, infrastructure, electric vehicles (EV), MSME, green energy, banking, cement, and healthcare, are projected to receive major attention due to prospective policy assistance and budget allocations.
Key companies in these industries, including Railtel, HAL, UPL Ltd., Larsen & Toubro Ltd., HCL, K.P. Energy Ltd., Adani Green Energy Ltd., Kotak Mahindra Bank Ltd., UltraTech Cement Ltd., and Fortis Healthcare Ltd., are worth keeping an eye on for the possible benefits of favorable budget pronouncements.
These companies represent a wide range of industries vital to economic growth and development, providing chances for investors seeking to profit from prospective government policies and investments.
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