Shares of commercial vehicle manufacturers rose on the Bombay Stock Exchange (BSE) on Friday, a day after the government announced a budgetary provision of Rs. 14,873 crore for Jawaharlal Nehru National Urban Renewal Mission (JNNURM) projects, mainly for the purchase of 10,000 buses.
While Tata Motors' shares moved up 1.2% to Rs. 161, Ashok Leyland rose 4.5% to Rs. 23 and Eicher Motors gained 0.3% to Rs. 2,765 on the BSE.
The allocation is not going to end up as a one-time bonanza but will offer a larger opportunity for vehicle manufacturers since it is likely to be a permanent feature in forthcoming budgets during the 12th plan period ending 2017, said sources.
JNNURM envisages Rs. 200,000-crore investment in improving urban amenities during the 12th Plan period, a significant portion of which will go into developing public transport facilities.
The industry, which largely depends on public sector entities, has been going through a bad phase after the large-scale purchase of 14,000 buses under JNNURM I ended in 2011.
"Tata Motors and Ashok Leyland have largely benefitted from the purchase in the first phase of JNNURM. Others such as Eicher, Mahindra & Mahindra and Force are now prepared to capitalise on this opportunity," said S P Singh, senior fellow, Indian Foundation for Transport Research and Training.
Besides provision for purchase of buses, projects to improve urban transport such as bus shelters and dedicated bus corridors are also likely to push sales.