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Consumer and Auto sectors
Excise duty: No change is good change
Auto stocks have been under pressure leading up to the Union Budget on fears of an
increase in excise duty (BSE Auto index was down 7.2% in February compared with the
BSE Sensex 3.8% drop). Similarly, tobacco manufacturer ITC (ITC IN; BUY) has been
down 4.3% in this month (compared with the 2.4% fall in the BSE FMCG index) on
fears of a potential increase in taxes on cigarettes. However, the Union Budget brought
relief as none of these fears materialised.
1 No change in Central Excise duty: The rate of excise duty for small cars, two
wheelers and commercial vehicles was maintained at 10%. Beneficiaries: All
stocks in the auto sector
2 No special duty on diesel vehicles: There were fears of the introduction of a special
duty on diesel vehicles in view of the government’s continuance with a subsidy on
diesel prices. Beneficiaries: Mahindra & Mahindra (MM IN; BUY) and Tata Motors
(TTMT IN; BUY)
3 No change in tax on cigarettes. Beneficiary: ITC (ITC IN; BUY)
Agricultural and rural push: positive for rural demand
1 Allocation of funds under Rashtriya Krishi Vikas Yojana (RKVY, a plan aimed at
agricultural growth) increased from INR67.6b to INR78.6b.
2 Credit flow for farmers was raised from INR3,750b to INR4,750b.
3 Minimum wage rates notified under the Mahatma Gandhi National Rural Employee
Guarantee Act (MGNREGA) will be indexed to the Consumer Price Index for
Agricultural Labour.
4 From 1 April 2011, remuneration of Anganwadi workers increased from INR1,500
per month to INR3,000 per month and for Anganwadi helpers from INR750 per
month to INR1,500 per month.
Beneficiaries: Mahindra and Mahindra (tractor and pick-up manufacturer), Hero Honda
(HH IN; HOLD) (40-50% two-wheelers sales in rural India) and all stocks in the fastmoving
consumer goods (FMCG) sector.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Consumer and Auto sectors
Excise duty: No change is good change
Auto stocks have been under pressure leading up to the Union Budget on fears of an
increase in excise duty (BSE Auto index was down 7.2% in February compared with the
BSE Sensex 3.8% drop). Similarly, tobacco manufacturer ITC (ITC IN; BUY) has been
down 4.3% in this month (compared with the 2.4% fall in the BSE FMCG index) on
fears of a potential increase in taxes on cigarettes. However, the Union Budget brought
relief as none of these fears materialised.
1 No change in Central Excise duty: The rate of excise duty for small cars, two
wheelers and commercial vehicles was maintained at 10%. Beneficiaries: All
stocks in the auto sector
2 No special duty on diesel vehicles: There were fears of the introduction of a special
duty on diesel vehicles in view of the government’s continuance with a subsidy on
diesel prices. Beneficiaries: Mahindra & Mahindra (MM IN; BUY) and Tata Motors
(TTMT IN; BUY)
3 No change in tax on cigarettes. Beneficiary: ITC (ITC IN; BUY)
Agricultural and rural push: positive for rural demand
1 Allocation of funds under Rashtriya Krishi Vikas Yojana (RKVY, a plan aimed at
agricultural growth) increased from INR67.6b to INR78.6b.
2 Credit flow for farmers was raised from INR3,750b to INR4,750b.
3 Minimum wage rates notified under the Mahatma Gandhi National Rural Employee
Guarantee Act (MGNREGA) will be indexed to the Consumer Price Index for
Agricultural Labour.
4 From 1 April 2011, remuneration of Anganwadi workers increased from INR1,500
per month to INR3,000 per month and for Anganwadi helpers from INR750 per
month to INR1,500 per month.
Beneficiaries: Mahindra and Mahindra (tractor and pick-up manufacturer), Hero Honda
(HH IN; HOLD) (40-50% two-wheelers sales in rural India) and all stocks in the fastmoving
consumer goods (FMCG) sector.
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