Budget crash? Don't panic. Analysts spot 35 structural stock picks to ride out the storm

While the Sensex and Nifty tumbled around 2% each after the Union Budget was shorn of high-impact immediate measures, leading brokerages are rushing to position portfolios ahead of what Goldman Sachs projects as "high-teen full-year returns" driven by an underlying earnings recovery. From defence contractors to data centre developers, analysts are racing to identify winners in a fiscal blueprint that prioritises strategic infrastructure over immediate consumption stimulus.

The Budget's sharpest edge cuts towards defence spending, set to surge 17.6% year on year to Rs 2.2 lakh crore in FY27, according to Motilal Oswal, which noted the allocation "cognises the prevalent geopolitical strife." This outpaces overall capital expenditure growth of 11.5% to Rs 12.2 lakh crore, signalling where the government sees both economic opportunity and national imperative converging.

"The Finance Minister balanced the imperatives of staying on the fiscal consolidation path with sustaining growth dynamics, while also seeking to fortify India's business architecture against prevailing geopolitical headwinds," Motilal Oswal observed, describing a Budget "shorn of high-impact immediate measures" but designed for long-term strategic positioning.

Axis Securities Names 13 Direct Plays

Axis Securities released a targeted list of Budget beneficiaries spanning multiple themes: UltraTech Cement, Ashok Leyland, Max Healthcare, HCL Technologies, Welspun Living, Embassy Office Park REIT, and Ahluwalia Contracts. The brokerage specifically identified thematic plays including GMDC for rare earth exposure, REC as a restructuring opportunity, Anant Raj for data centres, Syrma SGS Tech for electronics manufacturing services, MTAR for nuclear opportunities, Biocon, and Narayana Hrudayalaya.

Auto Sector Revs Up on EV Push

Centrum Broking flagged a critical shift in the Production-Linked Incentive scheme for automobiles, now revised to Rs 2.09 billion for 2025–26 from an earlier projection of Rs 2.81 billion, but with FY27 estimates jumping to Rs 59.39 billion. The firm sees Maruti Suzuki, Tata Motors, Mahindra & Mahindra, Bajaj Auto, Hero MotoCorp, Ola Electric, and Hyundai as beneficiaries.

The Budget's proposal to develop dedicated rare earth corridors across Odisha, Kerala, Andhra Pradesh, and Tamil Nadu, building on November 2025's Rare Earth Permanent Magnets scheme, alongside India Semiconductor Mission 2.0's fresh Rs 1 billion allocation, directly supports EV-exposed auto OEMs including Tata Motors, Mahindra & Mahindra, Maruti Suzuki, Ola, TVS, Bajaj, Ather, and Hero.

"Maruti Suzuki is our top pick among auto OEMs, as its new launches and the current export momentum are likely to drive healthy earnings growth," Motilal Oswal said, also favouring Mahindra & Mahindra "given the uptrend in tractors and healthy growth in UVs." Among two-wheelers, the brokerage backs TVS Motor, while auto ancillary picks include Motherson Sumi, Endurance Technologies, Minda Corporation, and Happy Forgings.

Infrastructure Spend Fuels Commercial Vehicle Demand

Nuvama highlighted public capex climbing to Rs 12.2 lakh crore from Rs 11.2 lakh crore, a 9% increase, with the Ministry of Roads allocation up 8% year on year to Rs 2.94 lakh crore. "This move underscores a continued focus on infrastructure-led growth," the brokerage noted, marking Tata Motors' commercial vehicle division and Ashok Leyland as prime beneficiaries.

Motilal Oswal reinforced this view, pointing to railways and road capex accelerating to 10.2% and 8% year on year growth respectively, "a sharp improvement over the dip in FY26E."

Data Centre Bonanza: Tax Holiday Until 2047

Perhaps the Budget's most aggressive incentive targets India's emergence as a global data centre hub. A tax holiday extending until 2047 for foreign cloud service providers using Indian data centres to serve global customers, coupled with mandatory servicing of Indian clients through local reseller entities, has brokerages focusing on infrastructure REIT potential.

"Combined with the existing 20-year tax holiday for Indian providers, these incentives should position India as a global hub," Motilal Oswal assessed. "We expect this to drive sustainable demand and premium pricing, directly benefiting established players like Anant Raj and Lodha Developers."

Centrum Broking tagged data centre developers, cloud service providers, and infra REITs as positive plays. Nuvama extended the opportunity to equipment providers ABB, Siemens, and Cummins that supply data centres. Axis Securities reinforced Anant Raj as its preferred data centre play.

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Power, Nuclear Energy Get Long Runway

Centrum Broking identified the Finance Minister's proposal to restructure Power Finance Corporation and Rural Electrification Corporation as positive for both NBFCs, part of a broader vision for NBFCs for Viksit Bharat with clear credit disbursement and technology adoption targets. Axis Securities separately highlighted REC as its restructuring play.

Nuvama noted that basic customs duty exemptions on goods imported for nuclear power projects have been extended until 2035 and expanded to cover all plants regardless of capacity, a tailwind for nuclear players including NPCIL and BHEL for engineering, procurement, and construction contracts. Axis Securities identified MTAR as its nuclear sector pick.

Rare Earth, Healthcare, Tech Round Out Picks

The rare earth corridor initiative found backing from Axis Securities, which named GMDC as its preferred exposure to the critical minerals theme. The brokerage also flagged opportunities in healthcare through Max Healthcare and Narayana Hrudayalaya, technology via HCL Technologies, textiles through Welspun Living, pharmaceuticals with Biocon, electronics manufacturing with Syrma SGS Tech, construction via Ahluwalia Contracts and UltraTech Cement, and real estate investment trusts through Embassy Office Park REIT.

Strategic Bets Beyond Immediate Stimulus

Goldman Sachs struck a measured tone on consumption. "While no new consumption stimulus was announced, consumption revival could sustain on lagged effects of policy easing from last year," the firm stated, while reinforcing its overweight position on defence spending.

"Over the medium term, we see rising opportunity in areas of strategic importance and new infrastructure, including digital infrastructure and data centres, biotech, transportation corridors, nuclear power and critical minerals," Goldman added, retaining its constructive view on Indian equities.

The Budget's emphasis on improving ease of doing business and weaning out procedural bottlenecks, as Motilal Oswal noted, suggests the government is betting on structural reforms over short-term sugar hits in a gamble that could define market performance through the fiscal year.

(Disclaimer: Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of The Economic Times)