Disinvestment stocks: Dalal Street experts are anticipating the Finance Minister Nirmala Sitharaman to announce the FY26 divestment target at Rs 50,000 crore, the same as this ongoing fiscal's, given the proceeds in FY25 so far have fallen short of budget estimates by a wide margin. A few analysts, though, are optimistic and see higher disinvestment targets of up to Rs 1,00,000 crore.
Ravi Singh, Senior Vice-President (Retail Research) at Religare Broking said the disinvestment target for FY26 is expected to remain at Rs 50,000 crore, in consistent with the previous fiscal plans. Potential disinvestment candidates include Bharat Petroleum Corporation Limited (BPCL), Container Corporation of India Ltd (CONCOR) and Air India, he said.
Among these stocks, Singh said BPCL stands out as a strong stock pick due to its strategic importance in the energy sector and potential for growth amid rising fuel demands. "However, there are concerns that the government may struggle to meet this target due to historical challenges and market conditions, which could lead to disappointment for investors," Singh said.
Ajay Garg, CEO at SMC Global Securities said several public sector companies are expected to be prime candidates for disinvestment in FY2025. These companies either have a strategic or non-strategic role, and their privatisation could help meet the disinvestment target. For Budget 2025, Garg expects the government to target Rs 75,000 crore to Rs 1 lakh crore in disinvestment, with a focus on strategic sales and minority stake reductions.
Key candidates, he said, include BPCL, LIC, CONCOR, SCI and Hindustan Aeronautics Ltd (HAL), all of which are likely to be in focus due to their significant market presence and profitability.
"Investors should monitor developments around these divestment processes closely, as successful sales could lead to substantial capital inflows into the government’s coffers while improving operational efficiencies for these companies post-privatization," he said.
Manish Chowdhury, Head of Research, StoxBox said the government may maintain the disinvestment target for FY26 at about Rs 50,000 crores in FY26. "IDBI Bank looks a prime candidate for disinvestment in FY26 as the process has picked up pace in recent weeks with potential suitors given data access for carrying out due-diligence. Other potential candidates include Shipping Corporation of India, and few fertilizer stocks such as NFL Ltd. and RCF Ltd," he said.
In 2024, the disinvestment target for FY25 was set at Rs 50,000 crore against Rs 51,000 crore for FY24.
"I think the chances of increasing this target would depend on market conditions. Over the past two years, the disinvestment momentum has not gained significant traction, with outcomes closely tied to market trends. If the markets continue to perform strongly, then there could be hope for a rise in disinvestment activity. However, stock picking among these candidates would require careful analysis of their fundamentals, government policies, and the broader market outlook," Trivesh D, COO at Tradejini said.
All non-defence and strategic companies should be divested, said Siddharth Oberoi, Founder and Chief Investment Officer at Prudent Equity.