Mahindra & Mahindra shares soar 14% in 4 days on GST boost. Analysts eye Rs 4,000 next

Mahindra & Mahindra shares jumped as much as 3.7% on Monday to Rs 3693.55 on the BSE, extending a four-day rally to 14%, as investors positioned the company as the top beneficiary of India’s GST 2.0 overhaul. Analysts say the stock has room to rise toward Rs 4,000, even as short-term technical indicators point to a possible minor pullback.

Finance Minister Nirmala Sitharaman last week announced the restructuring of the goods and services tax, collapsing four slabs into two—5% and 18%—while maintaining a 40% levy on luxury and sin goods. For the automobile sector, rates on most categories will fall from 28% to 18%, while tractors will be taxed at 5%, effective September 22.

Brokerages including Emkay Global, Jefferies, Motilal Oswal, and ICICI Direct said Mahindra & Mahindra is uniquely positioned to benefit due to its SUV and tractor portfolio.

Emkay Global called the reforms “contrary to expectations” in how decisively they favour M&M, while Motilal Oswal highlighted the company’s dual exposure to rural and urban markets.

Jefferies noted that nearly two-thirds of M&M’s SUV portfolio will now attract 40% tax versus 50% earlier, reducing sticker prices for flagship models such as the Scorpio-N and XUV700. Tractors, with the rate cut to 5% from 12%, are expected to drive stronger rural demand. ICICI Direct said lower acquisition costs will ripple through the farm machinery ecosystem, bolstering affordability and mechanization.

Technicals signal caution, but medium-term upside persists

Anand James, Chief Market Strategist at Geojit Investments, told ETMarkets that while the broader outlook remains positive, charts suggest near-term caution.

“After a week-long rally, the formation of an inside bar candle on Friday suggests caution, as it may signal upcoming profit booking,” he said. “The daily and weekly RSI indicators have either entered or are nearing the overbought zone, increasing the likelihood of a pullback in the first half of next week. However, the broader outlook remains positive, supported by expectations of strong festival season sales.”

On M&M specifically, James said that “A cup & handle breakout in weekly charts provides for a medium term uptrend aiming for 4,000 in a few months. However, the recent abrupt push higher is likely to bring in exhaustion, if not already. Towards this end, unless we see a close above 3,577, expect 4th September’s gap to be filled. Such a move may be used to re-enter longs.”

Festive season tailwinds

The timing of the GST overhaul ahead of the Diwali season is expected to magnify demand across segments. Axis Securities noted the reforms “arrive at the sweet spot” for the auto sector as pent-up demand collides with seasonal buying patterns.

M&M’s stock has emerged as the auto sector’s standout gainer, with the Nifty Auto index up nearly 4% on Thursday, while M&M’s 6% jump that day led the benchmark. Analysts say the combination of structural GST benefits and festive season demand underpins further upside, even if short-term profit booking appears likely.

Also read | Mahindra & Mahindra is GST 2.0’s biggest auto winner. 5 reasons why

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)