The Union Budget 2025 proved to be a soft ground for the infrastructure stocks, which continued to bleed during the trading session Monday, amid the absence of a big-bang announcement by the Finance Minister Nirmala Sitharaman for key sectors including capital goods, defence, railways, infra and more.
The union budget kept the capex allocation at Rs 11.2 lakh crore, largely flat for the year. However, the street did not like the allocation, which was expected to be revised on the higher side for the year and the capex and growth led stocks to another round of beating on Monday.
The Union Budget was set against a backdrop of the need to stick to the fiscal glide path; and support demand given the economic slowdown. Amid this pull and push, the FM has tried to play a balancing act via continued fiscal consolidation while lowering tax rates for the middle class to support consumption, said Nuvama Institutional Equities.
Capex allocation continues to remain robust despite steeper than expected fiscal deficit targets. Incremental allocation towards capex heavy ministries remained flat while defense allocation enhanced by 13 per cent in FY26E, said JM Financial. "Government fiscal consolidation strategy will now be monitored on debt as per cent of GDP versus the rigid annual fiscal deficit targets."
Shares of Housing & Urban Development Corporation Ltd, often abbreviated as Hudco, cracked more than 11.35 per cent to Rs 192.50 on Monday, with its total market capitalization slipping below 40,000 crore mark. The stock has corrected nearly 46 per cent from its 52-week highs.
Bharat Dynamics Ltd crumbled more than 10 per cent to Rs 1,128.45 on Monday, with its total valuations nearing Rs 43,000 crore mark. The stock had settled at Rs 1,256.50 in the previous session. The stock is down 37 per cent from its 52-week high at Rs 1,794.70.
Choice Broking has given a 'buy' rating on Bharat Dynamics with a target price of Rs 1,445 on the stock, while Antique Stock Broking has a target price of Rs 1,357 on the stock with the similar rating. Bajaj Broking has a 'buy' rating on Hudco with a target price of Rs 314.
Railway stocks including RITES Ltd, Rail Vikas Nigam (RVNL), Ircon International, RailTel Corporation of India Ltd and Indian Railway Finance Corporation (IRFC) tanked 5-8 per cent each. Jupiter Wagons and Titagarh Rail Systems were down up to 8 per cent, while Texmaco Rail & Engineering shed 5 per cent for the day.
The tepid growth in capex outlay is disappointing for companies in the roads and water segments; on the other hand, continued focus on rail rolling stock shall aid companies such as Titagarh and Texmaco Rail, said Nuvama. Antique has a 'hold' rating on RITES with a target price of Rs 243, while Axis Securities gave a 'buy' rating on RVNL with a target price of Rs 501.
Defence counters including Garden Reach Shipbuilders & Engineers (GRSE), Bharat Electronics Ltd (BEL), Hindustan Aeronautics Ltd (HAL), Apollo Micro Systems, Zensar Technologies, Ideaforge Technologies, Paras Defence, MTAR Technologies Ltd declined in the range of 6-9 per cent each.
InCred Equities has an 'add' rating on Bharat Electronics with a target price of Rs 400, while BoB Capital Markets has a 'sell' rating on Zensar Technologies with a target price of Rs 700. Motilal Oswal Financial Services has a 'buy' rating for MTAR Technologies and Elara Capital sees some positive impact of budget on GRSE.
Other stocks from the capital goods sector were also seen down to the tune of up to 10 per cent. Siemens, Bharat Heavy Electricals Ltd (BHEL), Power Mech Projects, BEML Ltd, Jaiprakash Power Ventures, Anant Raj Ltd, Samvardhana Motherson International dropped in the range of 5-10 per cent in Monday's trade.
JM Financial has a 'buy' rating on the BHEL with a target price of Rs 358. Motilal Oswal has a 'buy' tag on Siemens with a target price of Rs 7,500. Geojit Financial Services gave a 'buy' rating on Power Mech with a target price of Rs 3,330.