What the Budget does

• Excise duty reduced on buses and their chassis, small cars, two wheelers and three wheelers from 16% to 12% and on hybrid cars from 24% to 14%.
• Customs duty exemption to be withdrawn on naphtha for use in the manufacture of polymers in order to correct price distortions and revenue losses. Naphtha for use in the manufacture of polymers will be subjected to normal rate of 5%.
• Increased emphasis on Bharat Nirman and improving infrastructure.

Also read: How Budget affects your stocks

Impact on sector

• Reduction in excise duty on small cars, two wheelers and three wheelers will benefit paint companies, as the prices of cars will decline thereby boosting volumes.
• Increased emphasis on bolstering infrastructure in the country is a positive for companies, as it will enhance the performance of powder and protective coatings.

Impact on companies

• Reduction in excise duty on small cars, two wheelers and three wheelers will benefit Kansai Nerolac and Asian Paints [Get Quote] given their strong presence in the automotive paints segment.
• Emphasis on improving infrastructure such as roads, capital goods and power will be beneficial to Asian Paints, which has been witnessing strong growth in its powder and protective coatings businesses.

Powered by Equitymaster.com, an independent equity research initiative. Equitymaster is currently celebrating its 10th Anniversary. To know more about the special offers on its equity research subscription services, please click here.