Budget Buy-Sell Corner: Buy TCS And Infosys, Says Invest4Edu's Agarwala — NDTV Profit Exclusive

Finance Minister Nirmala Sitharaman is set to present an interim budget today. Since the general election is scheduled this year, a full budget will be presented after the new government is sworn in.

Despite being an interim budget, investors’ focus will be on factors like the government’s commitment to the medium-term fiscal consolidation path, whether capex growth can continue with fiscal consolidation, and the supply of government bonds that the market may be able to absorb, according to a Goldman Sachs note.

An interim budget typically assesses the current economic state, capex expenditure and receipts. It also offers revised estimates for the ongoing fiscal, along with projections for the upcoming year.

On NDTV Profit, stay tuned for live updates on stock recommendations from experts, who will assess the interim budget's impact on companies and their share prices.

Disclaimer: The views and opinions expressed by the investment advisers on NDTV Profit are of their own and not of NDTV Profit. NDTV Profit advises users to consult with their own financial or investment adviser before taking any investment decision.

Aditya Shah from Hercules Advisors is optimistic on the following sectors and stocks

• Chemicals: Navin Fluorine, Deepak Nitrite

• Capital Goods: Larsen & Toubro, PSP Projects, UltraTech Cement

• Pharmaceuticals: Syngene International, Divi's Laboratories

• Financial Services: HDFC Bank, ICICI Bank, Kotak Mahindra Bank

After the earnings report, the information technology sector has shown notable performance. A buying opportunity in the large-cap I.T. space, Agarwala.

He sees a long term buying opportunity in Tata Consultation Service and Infosys. Agarwala has a 'buy' rating on TCS with a target price of Rs 4,350. This implies an upside potential of 12.83%.

TCS Q3 Results: Key Highlights

Tata Consultancy Services Ltd.'s revenue rose meeting estimates, even as macro headwinds and furloughs weighed in a seasonally weak quarter.

Revenue of the Mumbai-based IT major rose 1.49% over the previous three months to Rs 60,583 crore in the quarter ended Dec. 31, according to an exchange filing on Thursday. That compares with the Rs 58,229 crore consensus estimate of analysts tracked by Bloomberg.

In the past year, the stock has witnessed a 13.26% surge, surpassing the benchmark Nifty 50 index, which saw an increase of 23.50%.

Infosys Q3 Results: Key Highlights

Infosys Ltd. has revised its growth expectations for the fiscal ending March 31, 2024, even as revenue declined in the October-December quarter.

Revenue of India's second largest IT services company fell 0.44% over the previous three months to Rs 38,821 crore in the quarter ended Dec. 31, 2023, according to an exchange filing on Thursday. That compares with the Rs 38,318 crore estimate of analysts tracked by Bloomberg.

In one-year, the stock has surged 6.86%, outpacing the benchmark Nifty 50 index, which recorded a increase of 23.50%.

In the defense and railways sectors, stocks have seen a big jump in over a year. Investors should be cautious about the prices they are paying and carefully consider the valuations, Shah added.

Themes like Defense, Electric Vehicles, and Power are expected to play out over several years. "Valuations are really expensive in these sectors", Shah said.

"A bull market can seduce you to invest in stocks at wrong valuations".

The electric vehicle sector is a promising theme to explore, with solar panels, solar rooftops, and infrastructure, particularly in the power sector, Kant added.

Additionally, the automotive and auto ancillary sectors, coupled with financial investments, form a noteworthy basket for consideration, he noted

Kant is positive on Tata Power, Tata Chemicals and JBM Auto.

Markets could enter into a long period of consolidation. On the downside, Nifty has good support around 21,400-21,200. On the upside, there is support at 21,900-22,000, Agarwala noted.

Dharmesh Kant, Head Equity Research, Chola Securites

• Nothing unusual came of the market during the interim budget. The only take away for market was the additional infra spending.

• "Fiscal consolidation is the mantra for this budget, this is not a growth oriented budget".

• FM was very clear about the technology driven and research driven development. "That is the area were action will come from".

• Defence was an area were nothing was announced. "I think it will come in the main budget".

Aditya Shah, Founder At Hercules Advisors

• The government is trying to play a Rahul Dravid type of innings, consistent and disciplined, Agarwala said.

• The infrastructure spending was a key point. "Nothing to get excited about and nothing to get disappointed about".

• "Government is very clear and saying, we have done our part of capex now the private players and the state government have to come".

• "In the coming budget the government should give incentives to the manufacturing, auto components, mobile manufacturing space".

Banks are emerging as interesting investment options, especially Public Sector Undertaking banks, showing notable upside potential. Insurance companies also has a positive outlook, according to Agarwala.

Bank of Baroda and State Bank Of India stand out as compelling choices based on market trends. Bank of Baroda presents a promising opportunity with a 3-4% upside, targeting a range between Rs 280-290, Agarwala said.

State Bank Of India also captures attention as an interesting prospect, with a suggested target price of Rs 670 and Shah recommended stop loss near Rs 630.

Agarwala holds a bullish outlook on insurance companies, positive on HDFC Life Insurance, SBI Life Insurance, ICICI Lombard General Insurance, and ICICI Prudential Life Insurance Company.

Invest4edu's Head of Research and Investments, Aditya Agarwala, suggests a 'buy' for Olectra Greentech Ltd., setting a target"

In one-year, the stock has surged 269.69%, outpacing the benchmark Nifty 50 index, which recorded a increase of 23.50%.

Olectra Greentech Ltd. is targeting approximately 165% compound annual growth rate over FY25-28, according to Chairman and Managing Director KV Pradeep.

The goal is backed by their new state-of-the-art greenfield facility near Hyderabad's Rajiv Gandhi International Airport, designed to increase their annual production capacity to 5,000 buses, he told NDTV Profit.

With an order book of over 8,000 vehicles, Olectra is focusing on capacity expansion. It plans to manufacture 2,500 units by the end of FY25, embarking on a growth rate of around 210%. Coupled with their intent to maintain an Ebitda margin of 12.5%, this positions Olectra to expand on its market share and volume, Pradeep said.

During interim budget announcement, Finance Minister Sitharaman announced proposing a significant green push in both mobility and energy sectors"

• Coal gasification and liquefaction capacity of 100 million tonnes to be set up by 2030, announces Sitharaman.

• Greater adoption of e-buses to be encouraged.

• New scheme of bio manufacturing, bio foundry to be launched. - Blending of CNG and biogas will be mandated in phased manner

Shares linked to rural spending and state-owned firms are likely to be a focus area in Finance Minister Nirmala Sitharaman’s budget speech, as policymakers seek ways to boost demand in the vast rural hinterland.

Read the full story here.

Motilal Oswal Financial Services

The upcoming general elections may lead to some populist schemes to be included in the Interim Budget 2024-25.

In particular, Motilal Oswal would be watching for any policies in these three areas:

• It is widely known that the agricultural sector has been weak in the past few quarters. Therefore, any populist measures directed to the farm economy will be keenly watched. It may include the expansion of the PM KISAN scheme by as much as 50% to Rs 9,000 per annum, or increased benefits in the form of an insurance scheme, or higher MGNREGA allocation.

• Since the cut in corporate income tax rates on Sept. 19, there has been a continuous demand to reduce personal income tax rates as well. The new tax regime can be made more attractive by either increasing the exemption income limit, raising the income tax rebate under Section 87A or reducing the highest surcharge rate, and.

• Some incentives to further boost the residential or commercial property market.

Goldman Sachs

Three key things for investors to look out for in the interim budget include:

• The government’s commitment to the medium-term fiscal consolidation path,

• If capex growth can continue with fiscal consolidation, and

• The supply of government bonds that the market may be able to absorb.