Auto and battery stocks mostly rose after the 2025 Budget announced rural economy measures and EV incentives, including customs duty exemptions on battery components.
01 Feb 2025 | 3159 Views | By Darshan Nakhwa
Shares of most automobile and battery manufacturing companies closed higher today, after Finance Minister Nirmala Sitharaman announced a slew of measures to drive the rural economy, and accelerate electric vehicle adoption in the country. The Nifty Auto index ended 1.9% higher at 23,305.45 level. In intraday trade, the index had ...
This is an Autocar Pro Plus article. Subscribe to continue reading.
Shares of most automobile and battery manufacturing companies closed higher today, after Finance Minister Nirmala Sitharaman announced a slew of measures to drive the rural economy, and accelerate electric vehicle adoption in the country. The Nifty Auto index ended 1.9% higher at 23,305.45 level. In intraday trade, the index had gained by 2.9%. Of the 15 constituents in the index, nine stocks gained, and the rest ended lower.
In the Budget 2025, the government announced programmes aimed at improving productivity, providing long and short-term credit, and increasing employment in the agriculture sector. The government also plans to utilise the India Post network to drive the rural economy--these steps are likely to increase farmers’ income, which in turn may drive sales of tractor and farm equipment, and entry level two-wheelers.
Among tractor and farm equipment manufacturers, shares of M&M ended 2.7% higher on the National Stock Exchange, and those of VST Tillers Tractors gained by 1.8% over the previous close. By comparison, shares of Escorts Kubota closed nearly 4.6% lower. Other than budget related announcements, the companies’ January sales performance also influenced stock prices. While M&M’s tractor sales rose by 15% on year, Escorts Kubota’s sales were down 7% on year.
The government has also announced that individuals earning up to Rs 12 lakh annually will be exempt from income tax under the new tax regime. The earlier limit for nil tax was Rs 7 lakh under the new tax slab. The new tax structure will increase disposable income, encouraging higher household consumption, savings, and investment. This is expected to provide a much-needed boost to automotive sales, particularly in the entry-level segment. This increase in purchasing power is likely to revive demand for budget-friendly cars priced under Rs 10 lakh, a segment that has been struggling for several quarters.
Further, in a bid to boost domestic production of lithium-ion batteries for electric vehicles, the government has announced plans to fully exempt basic customs duty on 35 additional capital goods used in their manufacturing. It has also exempted the customs duty on scrap of lithium-ion batteries and scrap of critical minerals cobalt and copper. These announcements are expected to significantly reduce the cost of domestic battery production and improve the availability of major raw materials for manufacturing.
Among passenger vehicle companies, Maruti Suzuki is likely to gain the most from budget 2025 announcements. The majority of its sales consist of entry level–mini and compact–cars. Recently, it also introduced its first battery electric vehicle, the e Vitara, which offers a driving range of 500 km, and comes equipped with advanced features. The company’s stock surged by 6.8% in intraday trade, before closing 4.9% higher for the day. The positive momentum also stems from 6.5% year-on-year growth recorded by the company in January sales.
Mahindra & Mahindra which launched its born electric line of vehicles–XEV 9e and BE 6–last year, is also expected to benefit from incentives for local battery manufacturing. The stock has been on an uptrend amid growing demand for its EVs. On Saturday, the company’s stock touched an intraday high of Rs 3,098.95, up 3.6% over previous close. These gains may also have been influenced by 18% year-on-year growth in its PV sales in January.
Among PV manufacturers, Hyundai Motor India’s stock closed 4.4% higher. In intraday trade the Creta maker’s stock advanced by 9% over the previous day’s close. This comes in the backdrop of sales of 65,603 units in January. Recently, it also launched the electric variant of Creta. Tata Motors was the only PV maker that closed lower on Saturday. Its stock ended 1.4% lower. The company reported a 11% year-on-year decline in PV sales for January.
In India, electric PV adoption has been sluggish due to limited product options, high purchase costs, inadequate charging infrastructure, high battery costs, dependence on imported battery cells, concerns over driving range, and lack of affordable models in certain markets. However, the government has continued to push for increased EV adoption with various schemes. In 2024, the government launched the PM E-DRIVE scheme which focuses on driving EV sales and manufacturing, and increasing charging infrastructure in the country. The 2025 budget's emphasis on domestic battery manufacturing is expected to reduce the cost of domestic battery production, which may bring down the cost of vehicles.
The shares of battery manufacturers like Exide Industries and Amara Raja Energy and Mobility Batteries closed 2.5% and 4% higher, respectively. Meanwhile, electric two-wheeler company, Ola Electric Mobility, stock closed nearly 1% lower. Among the legacy two-wheeler makers, shares of Bajaj Auto and TVS Motor Co ended 3.5% higher, and those of Eicher Motors and Hero MotoCorp gained by 3.9% and 1%, respectively.