The BJP-led Mahayuti alliance’s sweeping victory in Maharashtra, clinching over 200 seats, signals policy continuity and stability. However, the election-driven welfare promises, including direct cash handouts to 26 million women under the Ladki Bahin scheme, have raised concerns over the state’s fiscal priorities.

According to Emkay Global, raising the scheme's aid from ₹1,500 to ₹2,100 per month could increase budgetary allocations by 40%, from ₹46,000 crore to ₹64,400 crore (1.5% of the GSDP). In comparison, Maharashtra’s entire agricultural budget is just ₹35,600 crore for FY25.

This shift in spending priorities could negatively impact the state’s capital expenditure (capex) plans, which are already lagging. The Ministry of Statistics and Programme Implementation (MoSPI) predicts Maharashtra’s GSDP growth to slow to 5.5% in FY25, down from 10.9% in FY24.

Infrastructure and EPC Players: The Fallout of Slowing Capex

Maharashtra awarded ₹1.5 lakh crore worth of projects across roads, railways, and real estate in the first seven months of FY25. Key beneficiaries include:

• GR Infra: ₹5,300 crore
• J Kumar Infra: ₹6,000 crore
• HG Infra: ₹4,100 crore
• Ashoka Buildcon: ~₹4,000 crore
• Welspun Enterprises: ₹3,800 crore
• Afcons Infrastructure: ₹3,500 crore

While these projects are expected to drive near-term activity, concerns linger over delays in awarding new projects. This could place topline pressure on EPC companies, particularly those heavily reliant on Maharashtra.

Cement Sector: Mixed Prospects Amid Political Shifts

Maharashtra’s cement demand remains subdued, impacted by the absence of new infrastructure projects and uncertainty surrounding state elections. Cement prices in Mumbai stayed flat in November, reflecting weak demand conditions.

According to Prabhudas Lilladher, demand is expected to improve in December as the new government stabilizes and previously awarded infrastructure projects gain momentum. However, a failure to execute on the infrastructure theme could exacerbate pressures on the cement industry, which is already grappling with low volumes.

Real Estate Sector: Delayed Approvals, Positive Sentiment

The real estate sector has also felt the effects of election-related uncertainty, with new project launches delayed due to slowed government approvals. Despite this, the outlook remains optimistic:

1. Stable Government: A consolidated BJP-led state and central government is expected to streamline approvals, bolstering sentiment for developers in Maharashtra.
2. Strong Launch Pipelines: Real estate developers, including Lodha, DLF, and Oberoi Realty, are on track to meet their H2FY25 launch targets.

Second-Order Effects on Allied Sectors

Real estate recovery is likely to boost demand for related industries such as pipes, steel, and paints. Similarly, infrastructure-driven demand for cement and EPC services could support broader economic activity, provided capex picks up.

Fiscal Challenges: Balancing Development and Welfare

Maharashtra’s welfare spending is expected to rise significantly, potentially crowding out capex allocations. Key highlights:

• Welfare Scheme Cost: ₹64,400 crore (1.5% of GSDP)
• Capex Lag: Slowing allocation to infrastructure projects, which are critical for long-term growth.
• Budgetary Constraints: Fiscal space to fund development projects may shrink, impacting overall economic performance.

Sectoral Outlook: Risks and Opportunities

1. EPC and Infrastructure Companies

• Risks: Topline pressure due to delayed project awards and reduced capex.
• Opportunities: Execution of previously awarded projects offers near-term support.
• Key Players to Watch: L&T, J Kumar Infra, HG Infra, Ashoka Buildcon, GR Infra.

2. Cement Industry

• Risks: Low demand due to infrastructure and real estate delays.
• Opportunities: Demand recovery if infrastructure projects resume.
• Key Players to Watch: UltraTech Cement, Shree Cement, ACC.

3. Real Estate Sector

• Risks: Delayed approvals slowing project launches.
• Opportunities: Strong launch pipeline and policy stability to drive growth.
• Key Players to Watch: Lodha, Oberoi Realty, DLF.

Conclusion

Maharashtra’s fiscal resources are under strain as welfare politics takes precedence over infrastructure development. While sectors like EPC, cement, and real estate face near-term challenges, a stable government and execution of previously awarded projects could provide support.

Investors should monitor the state’s capex trends and focus on companies with diversified operations to mitigate risks tied to Maharashtra's fiscal pressures.

The Upcoming IPOs in this week and coming weeks are  Agarwal Toughened, Ganesh Infraworld, Suraksha Diagnostic, Property Share REIT, Rosmerta Digital, Avanse Financial and Nisus Finance.

The Current active IPO is Apex Ecotech, Abha Power and Steel, Rajputana Biodiesel, and Rajesh Power Services.

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