Automobile Sector : Budget Spotlight
 

Automobile Sector : Budget Spotlight

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The presentation provides an insight into performance of the Automobile sector and highlights the expectations from the upcoming Budget for the Automobile sector.

The presentation provides an insight into performance of the Automobile sector and highlights the expectations from the upcoming Budget for the Automobile sector.

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Automobile Sector : Budget Spotlight Automobile Sector : Budget Spotlight Presentation Transcript

  • Automobile Sector : Budget Spotlight
  • What To Expect What To Expect For The Automobile Sector From The IT Sector
  • Spotlight: Automobile Sectorby Arun Agarwal, Research Analyst
  • Automobile sector had a relatively difficult FY12 in terms of volume growth.After rebounding strongly post 2008 slowdown, the macro factors turnedunfavorable for the sector in FY12Volumes over FY09-FY11 grew at 25% CAGR and the same slowed down to 13%in FY12. Moreover the growth in FY12 has been primarily driven by the twowheelers and light commercial vehicle (LCV) segment.Passenger car and the M&HCV segment witnessed significant slowdown inFY12. Slowdown in economic activity, rise in interest rates and increase in fuelprices were the prime reasons that impacted the M&HCV and passenger carvolumes in FY12
  • In the upcoming budget, the industry is not expecting many positives for thissector. Given the increased fiscal deficit, we expect the general excise duty rateto increase by 2% and expect the auto manufacturer’s to pass on the hike asthe current operating margins leave little scope for the players to absorb thesameWe also expect the government to levy additional excise charge on dieselpassenger car/UV. This will:•Help the government recover the subsidy enjoyed on subsidized diesel•Contribute towards lowering of fiscal deficit•Avoid going with the idea of differential diesel pricing for•Personal/commercial purpose and evade issues related thereon
  • In line with the industry, we are not very hopeful of any major positives for theauto sector. We expect 10-12% volume growth for the sector in FY13 andmaintain a cautious view for the near term. However, from a long-termperspective, we are positive on the sector
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  • • Registered office: Kotak Securities Limited, 1st Floor, Bakhtawar, 229, Nariman Point, Mumbai - 400021. SEBI Registration No: NSE INB/INF/INE 230808130, BSE INB 010808153/INF 011133230/INE 011207251, OTC INB 200808136, MCXSX INE 260808130.• Disclaimer: Investments in securities are subject to market risks, please read the SEBI prescribed Combined RDD prior to investing.• * Awarded Best Brokerage Firm in India by AsiaMoney in 2006, 2007, 2008 and 2009