Union Budget 2021 | Infra stocks to watch: These shares may gain with a growth-oriented Budget

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Firms operating under the Capital good space could be the beneficiaries of this theme ahead of the Union budget.

Indian Union Budget 2021-22: Expectations are high that Finance Minister Nirmala Sitharaman will unveil a budget focused on growth. The catalyst that could propel India’s GDP into double digits and on which Nirmala Sitharaman could rely may be infrastructure. “We do believe that the government will go for a growth theme in the budget, to bring the economy back to normalcy and it would primarily focus on the push towards the infrastructure sector,” Ajit Mishra, VP Research, Religare Broking told Financial Express Online. Firms operating under the Capital good space could be the beneficiaries of this theme ahead of the Union budget.

“Government should consider raising investment funding for the National Infrastructure Pipeline (NIP) through borrowing from overseas markets by the issuance of overseas bonds through an SPV that could act as a mega Development Financial Institutional,” Vishal Wagh, Head of Research, Bonanza Portfolio told Financial Express Online. He added that progress on the National Investment Board is also expected which would help ease the bottleneck situation being faced by several projects.

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Further, analysts expect blueprints of the plan to set up Development Finance Institution for infrastructure projects, another push for stalled projects “There are high expectations that the government would increase allocation towards infrastructure schemes which will boost the order book of capital goods companies as well as drive volumes of cement companies,” Mishra said. He believes companies such as L&T, Siemens India, ABB India, Ultratech, Ambuja and ACC would benefit. Similarly, Visha Wagh of Bonanza Portfolio is focusing on L&T Ltd, PNC Infratech Ltd, Ultra Tech cement Ltd, and Ambuja cement.

The central government has taken pride in reforms since the pandemic clutched India’s economic growth. “In this budget, the focus is expected to be more on roads, city infra and water transmission. We would recommend taking positions in L&T, KNR Constructions and PNC Infratech in the road infrastructure space, and Ratnamani Metals & Tubes in the water transmission segment,” said Vinit Bolinjkar, Head of Research, Ventura Securities. He further expects the Union Budget to carry announcements related to affordable housing, IT deductions on home loan interest, special deductions for rent on salaried class. Indiabulls Housing, Capacite Infraprojects and Phoenix Mills are his picks in the real estate space.

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Advising investors to be selective in the real estate space, Ajit Mishra said that expectations are that the Budget will increase the deduction limit under income tax section 80C and reduce GST rates on input cost. “We feel Oberoi Realty and Godrej properties could be the winners if things fall in place for the sector,” he said.

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