M&M, Maruti, Hero Moto and other auto stocks rally up to 8% on GST cut boost

Auto stocks, including Mahindra & Mahindra (M&M), Eicher Motors, and others, rallied up to 8% on Thursday, September 4, after the GST Council, in its 56th meeting, announced a reduction in Goods and Services Tax (GST) from 28% to 18% across key segments of the automobile sector.

Eicher Motors stole the spotlight in the auto pack, rallying 5.4% to hit a record high of Rs 6,707.70 on BSE. M&M shares followed closely, surging 7.75% to Rs 3,539.25, also touching a new all-time high. TVS Motor Company extended its upward momentum, gaining 4.2% to a fresh peak of Rs 3,543.05, while Hero MotoCorp rose 3.6% to Rs 5,539.60.

Maruti Suzuki shares climbed 2.9% to Rs 15,349.85, while Tata Motors advanced 2% to Rs 706.05. Hyundai Motor posted a more modest rise of 1.9%, ending at Rs 2,564.75.

The revised rates will come into effect from September 22, 2025, as per the official communication following the council meeting held in New Delhi under the chairpersonship of Union Finance and Corporate Affairs Minister Nirmala Sitharaman.

The decision is part of a wider effort to provide relief to individuals, support the aspirational middle class, and facilitate trade under the GST regime.

Among the categories seeing a reduction in tax are petrol, petrol hybrid, LPG, and CNG cars not exceeding 1200 cc engine capacity and 4000 mm in length, which will now attract 18% GST instead of 28%.

Diesel and diesel hybrid cars with engine capacity up to 1500 cc and length under 4000 mm will also benefit from the reduced rate.

Three-wheeled vehicles, earlier taxed at 28%, will now fall under the 18% GST slab. The same applies to motorcycles with engine capacities of up to 350 cc, as well as motor vehicles used for the transport of goods.

In addition to vehicle categories, the council has introduced a uniform GST rate of 18% on all auto parts, irrespective of their HS code.

This standardization is aimed at simplifying the tax structure and addressing classification-related challenges within the industry.

With this rate cut, experts at Emkay Global believe that this cut could potentially drive a 10-20% demand spike.

M&M To Be Top Beneficiary

“Contrary to general expectations, M&M turns out to be the biggest beneficiary of GST cuts. Both MSIL and HMIL are expected to witness largely similar benefits. In 2Ws, HMCL, EIM and TVSL to be major beneficiaries,” the brokerage firm said in its note.

The note stated that Mahindra & Mahindra (M&M) is likely to be the biggest beneficiary owing to a 10% cut in GST rate across its portfolio (2/3rd portfolio to be at 40% rate vs 50% earlier with cess; balance at 18% vs 28% slab earlier), while Maruti Suzuki India Ltd (MSIL) and Hyundai Motor India Ltd (HMIL) would see similar benefits in the form of a 7-8% blended cut in GST for their respective portfolio (1/3rd portfolio to witness 3-5% reduction while ~10% reduction for balance 2/3rd volumes).

For the 2-wheeler category, Emkay Global said, “GST revision offers huge benefits across the board, especially for HMCL (10% cut for 94% of portfolio volumes), EIM RE (10% for 81% of portfolio), TVSL (10% cut for 70% of portfolio) followed by Bajaj Auto (10% cut for 49% of portfolio; 65% incl 3Ws). Despite higher tax (from 28% to 40%) on the above 350cc portfolio, Royal Enfield still is a major net beneficiary as 81% of the overall portfolio benefits with impact on 8% of the portfolio which is above 350cc.”

Also read: Is your stock portfolio ready for GST 2.0? Council meeting may rewrite market playbook

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