Bengaluru, Feb 5
The Union Budget 2025 is expected to boost the consumption sector, while long-term policies will benefit urban housing, insurance, and defence industries, according to a new report by smallcase, a leading investment platform.
Key Highlights from the Report:
Capex Investments & Infra Growth
- The capital expenditure (capex) budget has grown at a 15% CAGR over the past decade.
- By 2030, capex allocations could exceed $1.2 trillion, benefiting banks and specialised infrastructure NBFCs.
- Consumer finance companies remain available at more reasonable valuations, while most consumption-focused companies are overvalued.
DeepSeek AI: Expanding IT Market
- DeepSeek AI, a new AI development, has significantly expanded the total addressable market (TAM) for Indian IT firms.
- The cost of training AI models has dropped 30-50 times, enabling small and mid-sized firms to develop AI-driven products.
- Over the next 2-10 years, this could boost opportunities for Indian IT service providers.
- However, near-term growth rates and high valuations pose potential risks for the sector.
Emerging Investment Opportunities
- EVs & Mobility: The EV sector remains a promising area, supported by budget allocations and government incentives.
- Tourism & Religious Tourism: Tax benefits and government focus on developing tourism infrastructure could drive growth.
- Toy Industry: The global toy market is valued at $400 billion, with a major share in China. The budget’s push for local manufacturing could drive significant growth over the next 10-15 years.
Macro-Economic Outlook
India needs to sustain a 7.5-8% GDP growth rate to ensure long-term market stability and currency strength, according to Ambareesh Baliga, a veteran market expert.
