Cut in tax rebate may hit auto makers: Nomura

Auto shares such as Bajaj Auto fall after the Finance Ministry cuts the rebates paid on certain types of exports. Indian auto makers get refunded a portion of local taxes paid for components used in vehicles, motorcycles or auto parts that are sold overseas.

Nomura says the Finance Ministry notice has detailed reductions in the rebates of 2-5.5%.

The investment bank says fiscal 2014 earning of Bajaj Auto, Ashok Leyland and TVS Motors will be impacted by 6 to 10 percent, assuming prices of their vehicles remain constant.

Exports accounted for 36% of Bajaj Auto's total sales by quantity and 33 percent by revenue in the last financial year ended in March.

 

Bajaj Auto falls 1.8 percent, TVS Motors falls 1% while Ashok Leyland is down 0.8 percent.