- 02 Feb 2023
- ICICIdirect Research
BUDGETARY STIMULUS TO AID AUTO DEMAND RECOVERY
News: The Finance Minister presented the Union Budget 2023-24 yesterday with key measures for auto sector including (i) reduction in custom duty for on plant & machinery imports required for manufacturing of Li-On cells for electric vehicle batteries; (ii) increased custom duty on vehicles being imported as semi knocked down (SKD) as well as completely built unit (CKU) including EVs; (iii) increased allocation to FAME-II scheme for FY24E at Rs 5,172 crore, up 78% YoY; (iv) robust allocation at Rs 10 lakh crore, up 33% YoY towards infrastructure spends and (v) funds allocation for replacing old polluting vehicles with centre and state governments; among others
Views: We believe this Budget was growth oriented in nature and will further provide support to cyclical recovery in CV space with key beneficiaries being Tata Motors & Ashok Leyland, Eicher Motors in our coverage . Further removal of custom duty on plant & machinery for manufacturing of cells to be beneficial for company like Exide Industries who is already executing capex for Li-Ion cells manufacturing. Further extension of subsidised duty on Li-Ion cells to bode well for overall electrification trend. Even rationalisation of income tax slabs in new tax regime thereby augmenting disposable incomes for individuals is positive for premium 2-W space as well as PV segment with key beneficiaries being Eicher Motors, Maruti Suzuki, Tata Motors and M&M
Impact: Positive