ITC, IndiGo to Bajaj Finance: SBI Securities picks 5 stocks to buy after Budget 2025

In a recent report, brokerage house SBI Securities stated that the Union Budget 2025-26 was largely in line with expectations, focussing on key areas such as the poor, youth, middle class, farmers, MSMEs, exports, women, and reduction of compliance burdens. The budget aims to implement transformative reforms across six domains: taxation, power, urban development, mining, financial, and regulatory reforms.

According to SBI Securities, the primary emphasis of the budget was on reviving consumption while maintaining fiscal prudence by keeping other expenditure heads largely unchanged or with marginal revisions. A major highlight was the Finance Minister’s announcement that no income tax would be payable on income up to ₹12 lakh under the new tax regime. This move is expected to boost consumption, which has been subdued in recent quarters, as noted by several consumer-facing businesses.

SBI Securities highlighted that the Union Budget 2025-26 is consumption-oriented and sets the stage for the next phase of inclusive economic growth against the backdrop of global policy uncertainties and trade wars.

The reduction in personal income tax is equivalent to a stimulus of approximately ₹1 lakh crore, which is expected to flow back into the economy either through consumption or savings. Furthermore, the personal tax cut could encourage retirees and pension earners to allocate more savings into fixed deposits, benefiting deposit-starved banks over the medium to long term.

SBI Securities believes that beyond the budget, the government will implement additional reforms, including the new income tax bill set to be released in the coming weeks. Sectors such as auto, auto ancillary, realty, FMCG, healthcare, renewables, railways, defence, ERW pipe makers, and select banks and NBFCs are expected to benefit over the medium to long term, as per the brokerage.

Budget Stock Picks with a 12-Month Investment Horizon

ITC | Target: ₹530 | Upside: 15%

SBI Securities stated that ITC’s cigarette business is well-positioned for volume growth, supported by stable taxation and stronger enforcement actions against illicit trade. The company is mitigating inflation in leaf tobacco through improved product mix, strategic cost management, and calibrated pricing actions. Additionally, the demerger of ITC’s hotel business, in which ITC retains a 40% stake, is expected to enhance the return on capital employed (RoCE) and improve cash flows. ITC Hotels aims to expand its portfolio to over 200 hotels and 18,000+ keys by 2030. Meanwhile, ITC’s FMCG segment is likely to deliver stable performance despite inflationary headwinds, aided by cost control, mix enrichment, and pricing adjustments.

Bajaj Finance | Target: ₹9,037 | Upside: 13%

SBI Securities pointed out that the government’s decision to exempt individuals earning up to ₹12 lakh from income tax would support consumption growth, benefiting retail lenders like Bajaj Finance. Given Bajaj Finance’s strong presence in discretionary segments such as two-wheeler and three-wheeler auto loans, B2C loans, and consumer electronics financing, AUM growth is expected to accelerate. Lower credit costs and operational efficiencies driven by technology investments are likely to support RoA improvement. SBI Securities noted that Bajaj Finance trades at a P/B multiple of 5.4x/4.5x for FY25E/FY26E based on consensus estimates.

InterGlobe Aviation | Target: ₹5,200 | Upside: 16%

SBI Securities reported that IndiGo has consistently gained market share, increasing from 55% in March 2022 to 64% in December 2024, benefiting from disruptions faced by competitors. IndiGo’s low-cost operating model has helped it navigate challenges such as ATF price volatility, currency fluctuations, geopolitical disruptions, and aircraft engine-related issues. The Indian aviation sector is on a growth trajectory, supported by new airport developments and improved infrastructure. Two major international airports in Noida and Navi Mumbai are set to commence operations in FY26, enabling IndiGo to expand its capacity. SBI Securities believes that income tax cuts will increase disposable income, acting as a tailwind for the aviation sector.

The Indian Hotels | Target: ₹905 | Upside: 13%

SBI Securities noted that Indian Hotels Company (IHCL) commands a 66% premium in RevPAR within the hospitality industry. Under its Accelerate 2030 strategy, IHCL aims to expand its portfolio to over 700 hotels by 2030 while improving margins and achieving a 20%+ RoCE. The company reported strong financial performance in 9MFY25, with revenue, EBITDA, and PAT growing 21.5%, 27.7%, and 75.6% YoY, respectively. EBITDA margin expanded by 157 basis points YoY to 32.4%. IHCL’s highest-ever signings of 55 hotels in 9MFY25 further reinforce its growth potential.

Brigade Enterprises | Target: ₹1,335 | Upside: 15%

SBI Securities stated that Brigade Enterprises (BEL) has a diversified portfolio spanning residential, office, SEZ, retail, hospitality, and senior living assets. In Q3FY25, pre-sales, collections, sales volume, and average price realisation grew 63.5%, 27.5%, 29.2%, and 26.4% YoY, respectively. The company has a total ongoing project pipeline of 24.4 million square feet, with Brigade’s share at 18.98 million square feet. Upcoming residential projects totalling 11.9 million square feet provide strong revenue visibility. BEL’s land bank of 496 acres with a total project area of 53 million square feet further enhances its long-term growth potential.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.