Budget 2025: Sectors and Stocks Set to Benefit
The Union Budget 2025 has been announced, and it brings with it a host of changes that are set to impact various sectors of the Indian economy. This year, the government has shifted its focus from infrastructure spending to boosting consumption, particularly among the middle class. With significant tax cuts and increased disposable income, several sectors are poised to benefit. In this article, we’ll delve into the sectors and stocks that are likely to gain from the Budget 2025 and how you can position your portfolio to capitalize on these changes.
Key Highlights of Budget 2025
Before diving into the sectors, let’s quickly recap the key highlights of Budget 2025:
- Income Tax Relief: No income tax up to ₹12 lakh of income, up from the previous limit of ₹7 lakh. This translates to a direct saving of up to ₹80,000 for individuals earning between ₹7-12 lakh. Additionally, salaried employees can claim a standard deduction of ₹75,000, making the effective tax-free income up to ₹12.75 lakh.
- Focus on Consumption: The government has recognized that infrastructure spending alone cannot drive economic growth. By putting more money in the hands of taxpayers, the government aims to boost private consumption, which is a key driver of economic growth.
- Flat Infrastructure Budget: The infrastructure budget has been kept flat at around ₹11.2 lakh crore, signaling a shift from public spending to private consumption.
Sectors and Stocks to Watch
1. FMCG (Fast-Moving Consumer Goods)
The FMCG sector is one of the biggest beneficiaries of increased disposable income. As people have more money to spend, they are likely to purchase more branded products, leading to higher revenues for FMCG companies.
Key Stocks to Watch:
- ITC: ITC has successfully transformed from a cigarette-focused company to an FMCG giant with brands like Aashirvaad, Sunfeast, Bingo, and Classmate. With a strong distribution network and a focus on rural markets, ITC is well-positioned to benefit from the consumption boom.
- Hindustan Unilever (HUL): A market leader in the FMCG space, HUL has a wide portfolio of brands like Surf, Dove, and Kissan. While its growth has been moderate in recent years, the company’s strong cash flow and profitability make it a reliable pick.
- Mrs. Bector’s Food: A small-cap FMCG company, Mrs. Bector’s has a strong presence in the northern Indian market with brands like Cremica and English Oven. The company has shown robust revenue and profit growth, making it an attractive pick for investors looking for high-growth stocks.
2. Retail
The retail sector, particularly organized retail, is set to benefit from increased consumer spending. With more people moving from unorganized to organized retail, companies in this space are likely to see higher footfalls and sales.
Key Stocks to Watch:
- Avenue Supermarts (Dmart): Dmart has been a market leader in the grocery retail space. While its growth has slowed down due to inflation and competition from quick-commerce players, the company’s strong fundamentals and market position make it a good long-term bet.
- Titan: Titan is a leader in the organized gold retail market. With a wide range of designs and a strong brand presence, Titan is well-positioned to benefit from the growing trend of consumers shifting to organized gold retailers.
- Senco Gold and PC Jeweller: Both companies have seen significant corrections in their stock prices, making them attractive buys. Senco Gold, in particular, has shown strong growth and profitability, making it a good pick in the gold retail space.
3. Consumer Durables
With more disposable income, consumers are likely to spend on big-ticket items like air conditioners, refrigerators, and washing machines. The consumer durables sector is expected to see a boost in demand.
Key Stocks to Watch:
- Voltas: A market leader in the air conditioning segment, Voltas is well-positioned to benefit from increased consumer spending on home appliances.
- Whirlpool: Another major player in the consumer durables space, Whirlpool has a strong brand presence and a wide range of products, making it a good pick for investors.
- Havells: Havells is a leading player in the electrical goods and consumer durables market. With a strong distribution network and a wide product portfolio, the company is set to benefit from increased consumer spending.
4. Automobiles
The automobile sector, particularly two-wheelers and SUVs, is expected to benefit from increased consumer spending. With more disposable income, consumers are likely to upgrade their vehicles, leading to higher sales for automobile companies.
Key Stocks to Watch:
- Hero MotoCorp: A market leader in the two-wheeler segment, Hero MotoCorp is well-positioned to benefit from increased rural demand.
- Bajaj Auto: Another major player in the two-wheeler space, Bajaj Auto has a strong presence in both domestic and international markets, making it a good pick for investors.
- Mahindra & Mahindra (M&M): M&M is a leader in the SUV segment, with popular models like the Thar, XUV700, and Scorpio. The company’s focus on electric vehicles (EVs) also positions it well for future growth.
5. Travel and Tourism
With more disposable income, consumers are likely to spend on travel and leisure, benefiting the travel and tourism sector.
Key Stocks to Watch:
- Indian Hotels (Taj Group): Indian Hotels, the parent company of the Taj Group, is well-positioned to benefit from increased demand for travel and tourism.
- Interglobe Aviation (Indigo): Indigo is the market leader in the Indian aviation sector, commanding over 60% of the market share. While short-term volatility due to crude oil prices is a concern, the company is well-positioned for long-term growth.
6. Quick Commerce
The quick commerce sector, which includes companies like Zomato and Swiggy, is expected to benefit from increased consumer spending on food delivery and other quick commerce services.
Key Stocks to Watch:
- Zomato: Zomato is a market leader in the food delivery space. With the quick commerce sector expected to grow, Zomato is well-positioned to benefit from increased consumer spending.
- Swiggy: Swiggy is another major player in the food delivery and quick commerce space. The company’s strong growth trajectory makes it an attractive pick for investors.
7. Alcoholic Beverages
The alcoholic beverages sector is expected to see steady demand, even in times of economic slowdown. With increased disposable income, consumers are likely to spend more on premium alcoholic beverages.
Key Stocks to Watch:
- United Spirits: United Spirits is a market leader in the alcoholic beverages space, with a wide portfolio of brands. The company’s strong market position and profitability make it a good pick for investors.
- Radico Khaitan: Radico Khaitan is another major player in the alcoholic beverages space, with a focus on premium brands. The company’s strong growth trajectory makes it an attractive pick for investors.
Conclusion
The Budget 2025 has brought significant changes that are set to benefit several sectors of the Indian economy. With increased disposable income and a focus on private consumption, sectors like FMCG, retail, consumer durables, automobiles, travel and tourism, quick commerce, and alcoholic beverages are expected to see strong growth. Investors should consider adding stocks from these sectors to their portfolios to capitalize on the opportunities presented by the Budget 2025.
However, it’s important to conduct thorough research and due diligence before investing in any stock. While the Budget provides a favorable environment for these sectors, individual stock performance will depend on a variety of factors, including company fundamentals, market conditions, and broader economic trends.
By carefully selecting stocks from the sectors mentioned above, investors can position themselves to benefit from the growth opportunities created by Budget 2025.