Union Budget 2023 is just a couple of days away, and since this is the last full-year Budget before General Elections in 2024, it is anticipated to be a growth-oriented budget with a primary focus on job creation, investment-driven growth, and infrastructure development. In this article we list of the best stocks to buy before budget.
The government is already investing in sectors such as capital goods, manufacturing, sustainability, defence, railways, and public sector banks. Most notably, instead of turning populist, the Budget is anticipated to continue to concentrate on post-pandemic fiscal restructuring and divestment and subsidy reduction. Lets look at some of the sectors which will be affected the most by the union budget of 2023, and some good investment opportunities in these sectors. Here’s a list of best stocks to buy before budget.
SECTORS LIKELY TO BE AFFECTED THE MOST BY BUDGET 2023
Infrastructure
- Budget 2023 may see India stepping up on capex with major thrust on Gati Shakti and National Infrastructure Pipeline (NIP) targets and National Infrastructure Pipeline (NIP) targets.
- Since infrastructure development in 2 and 3-tier cities is likely to be a key focus area in the Union Budget, an increase in demand for aluminium is likely going forward.
- Focus was on the PM GatiShakti – National Master Plan for multimodal connectivity to economic zones. Everything, from roads to trains, from aviation to agriculture, as well as many ministries and departments, will be integrated under the PM GatiShakti National Master Plan.
Electric Vehicles
- Budget 2023 could see a push for adoption of electric vehicles in India.
- The government is expected to offer tax rebate on buying an electric vehicle by another two years till 2025, making it convenient for potential buyers to switch to the cleaner fuel mobility instead of an internal combustion one.
- The electric vehicle industry in India is picking pace with 100% FDI possible, new manufacturing hubs, and increased push to improving charging infrastructure. Federal subsidies and policy favoring deeper discounts for Indian-made electric two-wheelers as well as a boost for localized ACC battery storage production are other growth drivers for the Indian EV industry.
Healthcare
- The Budget 2023 is expected to include increased government spending on healthcare infrastructure such as primary health centers, community health centers, and technology and equipment to improve healthcare services.
- Additionally, the government is likely to focus on enhancing the public healthcare system by increasing the number of healthcare professionals and improving their training and development.
- The 15th Finance Commission recommended the Centre increase healthcare spending and indicated that public health spending in India should account for 2.5 per cent of GDP by 2025. The Center is expected to spend around Rs 86,000 crore in FY23, somewhat higher than the Rs 84,000 crore authorised in FY22.
Agriculture
- As millions of Indians rely on agriculture for their primary source of income, the sector has always been a major focus of the union budget, particularly in recent years.
- The industry anticipates that the government in Union Budget 2023 will support interventions that will enable farmers to sustainably increase their incomes this year as well. The allocation of funds for research and development (R&D) are should be anticipated in Budget 2023 in order to create new, safer, and more efficient methods of controlling weeds, diseases, and pests in chemical and biological streams.
- Companies engaged in such R&D activities may be motivated to invest more in the same by various forms of incentive. In addition, the sector requires additional government support in the form of incentives like Production Linked Incentives (PLIs) to maximize agricultural output in 2023.
Renewable Energy
- Budget 2023 could see the initiation or a push in the direction of Renewable energy schemes which were announced by the government of India. It has announced its ambitious plans to install 500 GW of renewable energy capacity by 2030.
- A committee consisted of the Central electrical authority has confirmed that an investment of atleast 2.57 lakh crores will be required to convert India’s dreams into reality.
BEST STOCKS TO INVEST BEFORE UNION BUDGET 2023
1. ITC
ITC is one of India’s foremost private sector companies and a diversified conglomerate with businesses spanning Fast Moving Consumer Goods, Hotels, Paperboards and Packaging, Agri Business and Information Technology.
As cigarettes being subjected to one of the highest brackets of tax and cess, ITC gets affected to a significant extent depending on how the government changes the taxation policies. Federation of All India Farmer Associations in its pre-budget demand said that tobacco crop needs to be treated like any other agricultural produce and tax burden on legally manufactured tobacco products in India is adversely impacting its growers, this has also resulted to a lot of brokerage firms to believe that the government will bring a moderate tax scenario for cigarettes and the improving margin profile across its business verticals resulting in free cash flow generation.
2. Power Finance Corporation (PFC)
Power Finance Corporation Ltd. is a leading Non-Banking Financial Corporation in the Country that has been providing financial assistance to power projects across India including generation, transmission, distribution, and RM&U projects.
With the G20 summit being held in India in 2023, and India committing to net zero emissions till 2070 in the COP 27 summit in Egypt, the government of India has already put forward a step in the right direction by approving the National Green Hydrogen mission and allocating an amount of 19,744 crores towards its implementation on 4th of January 2023. The Indian government also issued its first initial set of green bonds towards funding projects based on sustainibility. Therefore, Budget 2023 could see the initiation or a push in the direction of Renewable energy schemes which were announced by the government of India. It has announced its ambitious plans to install 500 GW of renewable energy capacity by 2030.
3. Cipla
Cipla is an Indian multinational pharmaceutical company, headquartered in Mumbai. Cipla primarily develops medicines to treat respiratory disease, cardiovascular disease, arthritis, diabetes, depression, and many other medical conditions.
Pharma stocks are in focus as Budget 2023 may contain good policy announcements for the sector, as the healthcare sector has been eyeing more budgetary support from the government, with the Hospitals wanting reforms in GST for the sector.
The Union Budget 2022-23 allocated INR 86,200 cr to the Ministry of Health and Family Welfare, and an increase of around 20% is expected in the budget of 2023 by the analysts, which can be sub-allocated to various departments like, ABDM, Infrastructure, education, Human Resource, Research, and other programs. This increase in healthcare spending is driven by increased allocation to centrally sponsored public health schemes to continue building sustainable healthcare infrastructure and ensure system preparedness to handle the increasing healthcare needs of the country.
4. Chambal Fertilizers
Chambal Fertilisers and Chemicals Ltd (CFCL) is an Indian agrochemicals manufacturing company based in Kota in Rajasthan. Established in the year 1985 by KK Birla Group, Chambal Fertilisers is the largest manufacturer of Urea in the private sector with an installed capacity of 1.5 million tonnes per annum.
While subsidy and development of the agri sector may directly impact Chambal Fertilizers stock. The stock price of Chambal has corrected substantially on account of higher subsidies from the GOI which together with the rupee depreciation and the Russia-Ukraine conflict put pressure on its working capital and leverage position. Given the assurance from the Finance Ministry regarding payment of subsidies and the strong positioning of Chambal in both Urea & NPK, we pick Chambal to play the agri theme ahead of the Union Budget.
5. L&T
L&T Construction is among the world’s top contractors. The business encompasses multiple business – Buildings & Factories, Transport Infrastructure, Heavy Civil Infrastructure, Smart World & Communication, Water & Renewable Energy and Power Transmission & Distribution.
Budget 2023 may see India stepping up on capex with a major thrust on Gati Shakti and National Infrastructure Pipeline (NIP) targets and National Infrastructure Pipeline (NIP) targets. Since infrastructure development in 2 and 3-tier cities is likely to be a key focus area in the Union Budget, an increase in demand for aluminum is likely going forward.
L&T has a strong and diversified order book of ~Rs 3.7 lakh crore with revenue visibility of more than 2 years. Order prospects for the next few quarters are high at Rs 6.3 lakh crore. FY23-24 Budget expectations for increased outlay in infrastructure bodes well for a leader like L&T.
6. TATA MOTORS
Tata Motors Group is a leading global automobile manufacturer with many offerings across commercial, passenger and electric vehicles. The company also recently posted a net profit of Rs 3,043 crore, compared to a net loss of Rs 1,452 crore in the corresponding quarter in 2022.
Budget 2023 could see a push for the adoption of electric vehicles in India. The government is expected to offer tax rebates on buying an electric vehicle for another two years till 2025, making it convenient for potential buyers to switch to cleaner fuel mobility instead of an internal combustion one. Tata motors being a market leader in the Electric Vehicle industry in India can gain a lot from the Union Budget 2023.
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Great pick.