What the Budget does

• Reduction in excise duties from 16% to 12% on manufacturing of 2&3 wheelers, buses and small cars
• Agricultural credit outlay increased to Rs 2,80,000 crore
• 10% increase in defence sector allocation to Rs 1,05,600 crore
• Dividend tax paid by parent company allowed to be set off against the same paid by its subsidiary
• Higher allocation towards road development programme such as the NHDP.

Also read: How Budget affects your stocks

Impact on sector

• Excise duty reductions will help lower prices and stimulate demand for 2&3 wheelers and small cars
• Increased demand for new buses from STUs (State Transport Undertakings) as well as private players
• Higher defence allocation will spur investment in new vehicles
• Higher agricultural credit outlay will help boost demand for tractors
• Increased thrust on road infrastructure is a positive for all the automobile manufacturers especially passenger vehicles and CVs

Impact on companies

• 2&3 wheeler makers like Hero Honda, Bajaj and TVS [Get Quote] Motors to benefit from reduction in excise duties
• Small car players like Tata Motors [Get Quote] and Maruti [Get Quote] will reap the benefit from small cars excise duty reductions
• Ashok Leyland [Get Quote] and Tata Motors, the leading bus manufacturers will benefit from excise duty reductions on buses
• Suppliers to the defence sector like M&M and Ashok Leyland to benefit from higher defence sector allocation
• Increased agriculture credit outlay will benefit two-wheeler makers as well as tractor manufacturers like M&M and Punjab Tractors [Get Quote].

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