Adani Ports, HAL, M&M, LG India among top picks post Budget for upto 40% upside potential

PL Capital believes that the Union Budget 2026-27 builds on previous years by emphasising infrastructure, defence production, and social welfare. The budget's priorities include driving trade and manufacturing, strengthening security needs, and promoting both rural and urban infrastructure.

According to PL Capital, the government's continued investment in these areas aims to establish India as a global hub for manufacturing, tourism, defence, and technology. A significant aspect highlighted by PL Capital is the government's adherence to the fiscal deficit target of 4.4% of GDP, despite major rationalisation in income tax and GST rates.

This fiscal discipline has been achieved through reductions in revenue expenditure, a 3 per cent decrease in central government capital expenditure, and lower capex spending by states, it noted. The brokerage firm points to the lack of 'fancy assumptions' for FY27, with conservative projections: around 10 per cent higher tax collections, a 2 per cent GST decline, and a 15 per cent rise in excise, primarily from cigarette duties.

Total capital expenditure has been increased by 12 per cent, and including grants to states, there is a proposed 22 per cent overall rise in capex. PL Capital notes that the full benefits of last year’s income tax and GST reductions, as well as interest rate cuts, are yet to be realised, suggesting room for a positive economic surprise if global conditions stabilise.

Markets have reacted with caution due to the absence of direct policy announcements, such as an increase in STT rates on F&O trades and the lack of LTCG tax relief for foreign investors. Nonetheless, PL Capital believes the Budget continues to prioritise infrastructure, renewables, defence, logistics, tourism, value-added farming, and data centres, supporting strong economic momentum.

The brokerage firm suggest a bottom-up approach is best suited for the current environment, and remain constructive on banks, NBFCs, automobiles, select staples, jewellery, durables, hospitals, defence, ports, and telecom stocks.

From the largecap space, PL Capital has pick Adani Ports (Target Price: Rs 1,876), Bharti Airtel (Target Price: Rs 2,259), Britannia (Target Price: Rs 6,761), Hindustan Aeronautics (Target Price: Rs 5,507), ICICI Prudential AMC (Target Price: Rs 3,300), L&T (Target Price: Rs 4,806), M&M (Target Price: Rs 4,100) and UltraTech Cement (Target Price: Rs 14,168), for upto 40 per cent upside.

It has picked Amber Enterprises India Ltd (Target Price: Rs 8,263), Aster DM Healthcare Ltd (Target Price: Rs 775), LG Electronics India Ltd (Target Price: Rs 1,920), Max Healthcare Institute Ltd (Target Price: Rs 1,350) and Supreme Industries Ltd (Target Price: Rs 4,566) for 30-40 per cent upside potential.