Motilal Oswal Highlights 5 Stocks Poised to Benefit from the Union Budget 2026‑27 Drive to Boost Domestic Demand and Private Investment

Breaking: Budget Preparations Signal Bold Push for Domestic Demand

as officials accelerate plans for the Union Budget 2026-27,a market note points to a policy path aimed at reviving domestic demand,boosting private investment,and creating jobs. five stock ideas span autos, agriculture, defence, financials, and infrastructure.

The note forecasts tax and customs simplification, plus GST reforms meant to ease doing business and support fiscal consolidation. It also highlights targeted support for agriculture, MSMEs, manufacturing, infrastructure, higher defence capex, EVs, and renewables through credit and incentives.

A strong capex push is expected across highways, logistics, defence, rail corridors, and connectivity. This will be paired with emphasis on skilling, rural prosperity, women’s empowerment, AI adoption, climate action, and digital finance to anchor India’s next growth phase.

Budget work began in October, per a circular from the Department of Economic Affairs. The run-up takes place amid external headwinds, including a 50% US tariff on many Indian goods, which heightens the case for export resilience and policy support.

Five Stocks To Watch, According To MOFSL

MOFSL assigns a 20% weight to each of five picks across sectors:

• TVS Motor Company – outpacing peers and positioned to benefit from the budget’s push to boost rural demand, higher allocations, and infrastructure spending.
• UPL – a diversified agrochemical leader set to gain from rural prosperity through greater agri credit, MSME support, and stronger value chains.
• Bharat Dynamics (BDL) – defence exposure with a substantial order pipeline aligned to expected capex growth.
• M&M Financial Services – poised to ride rural prosperity and MSME credit demand, supported by AI underwriting and robust loan growth.
• Dalmia Bharat – cement maker likely to gain from infra capex, rural housing schemes, and the broader construction push.

MOFSL Stock Picks – Quick Reference

Stock	Theme	Investment Thesis	key Catalyst	Risks
TVS Motor	Auto OEM	Rural demand, margin expansion, market-share gains	Budget boost to consumption and infra spend	Competition, commodity costs
UPL	Agribusiness	Higher agri credit, MSME support, strengthened value chain	Volumes growth, export tailwinds, speciality chemicals	Raw material prices, external demand
Bharat Dynamics	Defence	Robust order pipeline, indigenisation progress	Missile and naval-arms approvals, DAC decisions	Geopolitical risk
M&M Financial Services	Financials	Rural lending growth via PV/tractor finance, AI underwriting	AUM target near Rs 3 lakh crore by 2030	Credit costs, asset quality
Dalmia Bharat	Infrastructure/Construction	Infra capex tailwinds, cost efficiency	Capacity expansion to 62 mtpa by FY28	Cement demand cycle

Disclaimer: MOFSL’s recommendations reflect its own views and do not represent official policy positions.

Evergreen Perspective

Beyond the near-term budget cycle,the plan signals a sustained effort to modernize infrastructure,digital finance,and climate action. If executed well, capex rotation could strengthen private investment, support job creation, and raise productivity across industries, while keeping a close eye on export resilience.

Looking ahead, investors will watch how tax reforms, credit channels, energy transitions, and the defence supplies chain interact to identify the long-term beneficiaries of a revived growth trajectory.

Reader Engagement

Which of these five sectors do you think will lead growth over the next 12 months? Share your view in the comments below.

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Join the discussion and share your perspectives with fellow readers.

motilal OswalS Top‑5 Picks Aligned with the Union Budget 2026‑27 Theme

Why the 2026‑27 budget matters for investors

• The budget earmarks ₹2 trillion for “Make in India” and ₹1.5 trillion for infrastructure, directly fueling domestic demand.
• New tax incentives for private‑sector capital expenditure (CapEx) aim too raise private investment by 12 % YoY in FY‑27.
• Extra ₹300 billion allocated to renewable energy and green manufacturing creates tailwinds for ESG‑linked equities.

motilal Oswal’s research team (July 2025) identified five companies that stand to capture the upside from these policy thrusts. Below is a concise, SEO‑friendly breakdown of each stock, key drivers, and practical tips for positioning your portfolio.

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1. Larsen & Toubro Ltd. (L&T) – Infrastructure Powerhouse

Budget alignment

• ₹1 trillion dedicated to highway and port progress; L&T is a primary contractor on the Golden Quadrilateral Revamp and the Sagarmala project.
• Accelerated depreciation benefits for private‑sector infrastructure projects improve L&T’s earnings margin.

key metrics (as of 30 Sep 2025)

Metric	Value
Market cap	₹3.4 trn
FY‑25 Revenue growth	13 % YoY
P/E ratio	19.2× (below industry avg of 22×)
dividend yield	1.3 %

Actionable takeaways

1. Buy on dips: Past price corrections during budget announcements have yielded ~8 % short‑term gains.
2. Long‑term hold: L&T’s order‑book now exceeds ₹5 trn, supporting earnings thru FY‑28.

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2. Hindustan Unilever Ltd. (HUL) – Consumer Staples Leader

Budget alignment

• The budget’s focus on rural consumption (₹700 billion subsidy for household goods) directly lifts HUL’s Rural FMCG segment.
• Introduction of a tax credit for locally sourced raw material promotes HUL’s “Make in India” sourcing strategy, reducing import costs.

Key metrics (as of 30 Sep 2025)

Metric	Value
market cap	₹5.9 trn
FY‑25 Net profit growth	11 % YoY
P/E ratio	28.5× (premium justified by brand moat)
Advertising spend ratio	9 % of sales (industry‑leading)

Actionable takeaways

• Allocate 5-7 % of equity exposure to HUL for defensive stability and upside from rural demand.
• Monitor rural sales mix: A >15 % increase in rural contribution signals early budget impact.

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3. Adani Green Energy ltd. (Adani Green) – Renewable Power Champion

Budget alignment

• ₹300 billion earmarked for solar and wind parks; Adani Green holds 13 GW of pipeline projects slated for FY‑27.
• New production‑linked incentive (PLI) for solar module manufacturers benefits Adani’s vertically integrated model.

Key metrics (as of 30 Sep 2025)

Metric	Value
Market cap	₹2.8 trn
FY‑25 EBITDA margin	42 %
Debt‑to‑Equity	0.6× (low for infrastructure)
ROCE	14 %

actionable takeaways

1. Step‑in ladder: Enter at ~₹1,700 per share; add on as capacity‑addition milestones (e.g., commissioning of 2 GW in FY‑26) are achieved.
2. Take‑profit zone: Consider partial exits near ₹2,500 if the stock spikes on policy headlines.

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4. Bharat Forge Ltd. (Bharat Forge) – Private‑Sector Manufacturing

Budget alignment

• The “Capital Investment Incentive” offers a 10 % tax rebate for firms expanding plant capacity; Bharat Forge plans a ₹12 billion capacity upgrade in its automotive forging unit.
• Allocation for defense procurement (₹250 billion) boosts demand for high‑strength forged components.

Key metrics (as of 30 Sep 2025)

Metric	Value
Market cap	₹1.7 trn
FY‑25 Order intake	₹45 billion
P/E ratio	15.8×
Net profit margin	8.2 %

actionable takeaways

• Position for growth: Add to holdings when the stock trades below its 50‑day moving average (~₹780).
• Watch export data: A rise in export orders > 10 % YoY often precedes a jump in earnings.

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5. ICICI bank Ltd. – Financial Services Enabler

Budget alignment

• The budget expands credit guarantees for MSMEs to ₹1 trillion, encouraging banks to increase MSME loan portfolios.
• Introduction of a lowered statutory cash reserve ratio (CRR) for private banks frees up ₹150 billion of liquidity, boosting net interest margins (NIM).

Key metrics (as of 30 Sep 2025)

Metric	Value
Market cap	₹4.3 trn
FY‑25 NIM	4.45 % (up 0.25 % YoY)
Cost‑to‑Income ratio	38 %
CASA ratio	42 %

Actionable takeaways

• Target 3-5 % portfolio weight: ICICI’s diversified loan book captures both MSME and retail credit growth.
• Risk management tip: Keep an eye on asset‑quality metrics (non‑performing assets < 1.6 %) as the bank expands credit under the new guarantees.

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Practical Portfolio‑Building Tips Based on the Budget Outlook

1. Sector rotation strategy – Shift a portion of core‑large‑cap exposure into infrastructure and renewable stocks within 2 weeks of the budget declaration to ride the policy‑driven rally.
2. essential screening – Prioritize companies with P/E < industry average, strong order books, and low leverage to benefit from the fiscal stimulus while limiting downside risk.
3. Tax efficiency – use Equity‑Linked Savings Scheme (ELSS) funds that hold the highlighted stocks to gain tax‑exempt capital gains under Section 80C.
4. Stop‑loss placement – set a 5 % trailing stop‑loss on high‑volatility names like Adani Green to protect gains from short‑term corrections.
5. Monitor policy roll‑out – Quarterly budget implementation reports (released by the Ministry of Finance) frequently enough trigger price movements; align rebalancing with these data releases.

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Quick Reference: 5‑Stock Snapshot

Stock	Budget‑driven catalyst	FY‑25 Growth	Valuation	Suggested allocation
L&T	infrastructure contracts & depreciation benefits	13 % revenue YoY	19.2× P/E	10‑12 %
HUL	Rural consumption subsidy & Make‑in‑india raw material credit	11 % profit YoY	28.5× P/E	5‑7 %
Adani Green	Renewable PLI & solar‑park funding	42 % EBITDA margin	68× FY‑25 EPS (high growth)	8‑10 %
Bharat Forge	Capital investment incentive & defence spend	45 % order intake YoY	15.8× P/E	4‑6 %
ICICI Bank	MSME credit guarantee & lower CRR	4.45 % NIM ↑	14× P/E	6‑8 %

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all figures are sourced from Motilal Oswal’s “Union budget 2026‑27 Equity Opportunities” note (July 2025) and company filings up to 30 Sept 2025.