Key Takeaways
- You can capture multi‑digit upside by aligning your portfolio with the budget’s capital‑expenditure thrust.
- NMDC, Bharat Electronics, L&T, SBI Life, KNR Constructions, Jupiter Wagons, GRSE, HAL, TVS Motor, Waaree Energies and TD Power are the top 11 plays.
- Sector‑wide tailwinds: infrastructure capex ~3% of GDP, defence spend up 15%, renewable‑energy push and supply‑chain localisation.
- Expect FY27‑28 earnings CAGR of 12‑30% across these names, driven by order‑book expansions and policy‑backed demand.
- Watch fiscal‑deficit targets (4.4% → 4.2% FY27) for clues on debt‑financed projects and credit‑friendly liquidity.
Most investors missed the budget’s hidden catalyst – that’s where the real money lives.
When Finance Minister Nirmala Sitharaman unveils the FY26‑27 Union Budget on February 1, the headline numbers will grab headlines, but the real story for portfolios is the granular allocation to capital expenditure (capex). The government plans to keep capex near 3% of GDP, with a sharp focus on infrastructure, defence and clean‑energy projects. That policy matrix instantly reshapes the earnings outlook for a select group of companies that sit at the nexus of these priority sectors.
Why NMDC’s Volume Upside Mirrors the Critical‑Minerals Mission
NMDC, India’s premier iron‑ore miner, is positioned to ride the budget’s “critical minerals” thrust. The Ministry’s new mission to secure domestic sources of iron, copper and rare‑earths translates into higher procurement quotas for NMDC’s output. Projected volumes climb to 51 MT in FY27 and 54 MT in FY28, backed by ongoing evacuation and capacity‑expansion capex that will lift total capacity to 100 MT by FY30. Higher realized prices, coupled with a stable cost base, give NMDC a clear earnings visibility corridor. Analysts peg the target at ₹98, implying a 20% upside from current levels.
How Bharat Electronics Becomes the Defence‑Capex Darling
Bharat Electronics (BEL) stands to benefit from an expected 15% YoY rise in defence capex over the FY26 base. Recent Defence Acquisition Council approvals for radar, missile and naval platforms have already expanded BEL’s order book. With indigenisation quotas tightening, BEL’s domestic electronics content will surge, driving operating leverage and margin expansion. The firm’s revenue and PAT are projected to grow at 18% and 16% CAGR respectively through FY28. A target of ₹520 reflects a 25% premium to the current market price.
Why L&T’s Order‑Flow Engine Will Accelerate Under the Budget
Larsen & Toubro (L&T) is the archetype of a diversified engineering‑construction (E&C) powerhouse. The budget’s commitment to sustain capex at ~3% of GDP, with a 10% YoY increase, fuels pipelines in roads, railways, power and defence. L&T expects to add 4‑5 GW of thermal power projects in the next two years, plus a foothold in nuclear EPC contracts. Order‑flow growth is modelled at a 13% CAGR (FY25‑28) for the core E&C segment, while EBITDA and PAT are projected to expand at 18% and 22% CAGR respectively. The target price of ₹4,600 assumes a 30% upside.
How SBI Life Can Leverage Insurance‑Sector Reforms
SBI Life sits at the forefront of a liberalised insurance landscape. The budget is likely to raise the foreign‑direct‑investment ceiling and ease distribution norms, widening the addressable market. APE (annual premium equivalent) growth of 13‑14% is already baked into management guidance, with FY27‑28 APE CAGR of 15% and a VNB (value‑added net premium) CAGR of 16%. Operating RoEV (return on equity) above 18% underscores profitability resilience. The target of ₹2,750 reflects a 22% upside.
Why KNR Constructions Is Poised for an Irrigation‑And‑Roads Boom
KNR Constructions will capture higher Ministry of Road Transport & Highways (MoRTH) allocations and the government’s aggressive irrigation‑and‑river‑linking agenda. The upcoming NHAI tender window (Jan‑Mar 2026) could unlock ₹8,000‑10,000 crore of contracts. Diversification into mining, solar and urban infra provides a buffer against cyclicality. Expect a revenue CAGR of 18% through FY28, with a target price of ₹240.
How Jupiter Wagons Benefits From the Railway‑Capex Surge
Railway capital spending is set to rise 5‑10% YoY, feeding demand for rolling stock, freight‑corridor assets and safety systems like Kavach 4.0. Jupiter Wagons, a key wagon manufacturer, will see order‑book growth that aligns with the “Viksit Bharat” vision of modern logistics. A target of ₹355 implies a 28% upside, justified by projected EBIT margin expansion to 12% by FY28.
Why GRSE’s Self‑Reliance Drive Fuels Medium‑Term Gains
Garden Reach Shipbuilders & Engineers (GRSE) is a bellwether for the government’s Atmanirbhar Bharat defence push. The firm’s adoption of AI‑driven design and robotics, coupled with a sturdy net‑worth, positions it for steady order inflows. Trading at 31.3x FY28E EPS, the target of ₹3,110 suggests a 13% upside, driven by new ship‑building contracts and modernisation programmes.
How HAL’s Indigenous Aircraft Programme Creates a 20‑Year Revenue Tail
Hindustan Aeronautics Limited (HAL) stands to gain from a projected 8‑10% rise in defence budget, translating to a capital allocation of ₹2.1‑2.3 lakh crore. HAL’s focus on indigenous fighter jets, helicopters and UAVs provides a multi‑decade revenue runway. With a target of ₹5,585 (≈33x FY28E EPS) the upside reflects a 24% premium to current pricing.
Why TVS Motor’s Global Expansion Accelerates Earnings Multiples
TVS Motor posted a record Q3 FY26, with revenue up 37% YoY and EBITDA margins hitting 13.1%. International sales surged 35%, while EV two‑wheelers grew 40% YoY, cementing the brand’s premium‑segment push. The launch of the Apache RTX further diversifies the portfolio. A target price of ₹4,350 assumes a 20% upside as the firm captures both domestic recovery and overseas growth.
How Waaree Energies’ Capacity‑Ramp Positions It for the Renewable‑Energy Gold Rush
Waaree’s Q3 FY26 revenue jumped 119% on a 167% EBITDA surge, driven by a cell capacity increase to 0.8 GW and module output to 3.5 GW. With a pipeline of >100 GW of orders and a Rs 25,000 crore capex plan that adds 10 GW of ingot‑wafer capacity, the company will command a total capacity of 28.4 GW (module), 15.4 GW (cell) and 10 GW (wafer) by FY27. The target of ₹3,849 reflects a 27% upside, underpinned by strong order visibility and diversification into BESS, green hydrogen and smart‑metering.
Why TD Power Systems Is the Unsung Hero of Decentralised Power
TD Power Systems supplies sub‑60 MW AC generators to turbine OEMs, EPC firms and data‑centre operators. Its new 0.22 msf Bengaluru plant (₹120 crore capex) will enable product diversification for renewables, waste‑to‑energy and captive‑generation projects. Export sales already represent 76% of H1 FY26 order wins, with order inflows up 60% YoY to ₹656 crore. FY27 revenue guidance of ₹2,200 crore (≈50% YoY growth) validates the firm’s growth runway. A target of ₹911 offers a 19% upside.
Investor Playbook – Bull & Bear Cases
Bull Case: The budget cements a multi‑year capex pipeline, driving order‑book expansion across infrastructure, defence and clean‑energy. Companies that sit at the execution frontier (NMDC, L&T, BEL, Waaree, TD Power) can see earnings multiples lift 15‑30% as margins improve and cash conversion accelerates.
Bear Case: If fiscal‑deficit targets tighten more aggressively than expected, the government may curtail discretionary capex, throttling the pipeline. Additionally, execution risk (project delays, cost overruns) could compress margins for heavy‑capex players like L&T and HAL.
Bottom line: Position a core of the 11 stocks now, with a focus on those that combine strong order visibility, favourable policy tailwinds and solid balance sheets. Re‑balance as the budget details crystallise in February.