The auto sector stocks shifted into top gear today, September 8, with the Nifty Auto index rallying over 3%. Investors cheered the GST new rates for vehicles as well as steps by auto OEMs to cut prices and pass on benefits to customers. No wonder, the auto sector is the day’s star performer on Dalal Street.
The GST slabs have now been simplified to a 2-rate structure and especially for the auto companies, it meant a significant lowering of taxes from 28% earlier to 18% now. However, SUVs and luxury cars at a flat 40%, replacing the earlier 43–50% structure. The cess component is done away with. and electric vehicles continue at just 5% GST.
Tata Motors and M&M roll out steep cuts
Tata Motors announced it will fully pass on the benefits of GST 2.0 across its passenger vehicle portfolio, with prices coming down by up to Rs 1.55 lakh from September 22. The Tata Motors share price gained over 3% to trade in the intraday trading session today.
M&M went a step ahead, extending the price cut benefit from September 6. Its popular SUVs including the Thar, Scorpio, Scorpio-N, XUV700, and Bolero are now cheaper by Rs 1.01 lakh to Rs 1.56 lakh. Shares of M&M rose over 3% to Rs 3,672 in intra-day trade, hitting fresh highs and cementing their spot among the top auto gainers.
Top 5 gainers after the GST cut
Many OEMs are leveraging these policy-driven price cuts as strategic benefits to win over customers and boost sales. The reform-driven momentum has triggered sharp moves across the auto stocks as well. Several stocks delivered double-digit gains since September 4. Here’s a closer look at the five standout performers as per the data from financialexpress.com.
Mahindra & Mahindra: Riding the SUV wave
M&M’s share price has surged 6.4% from September 4 levels. The momentum in the share price resulted in 16% gains over the past 1 week. The SUV tax cuts of 5-10 percentage point to 40% is considered as a surprise win for M&M and its share price too.
M&M’s aggressive price cuts across SUVs during the festive season is expected to boost sales. Long-term investors have also been rewarded. The stock has delivered 43% CAGR over the last five years.
Ola Electric: Volatile but climbing
Ola Electric Mobility shares have been on a rollercoaster. While the GST cut initially lifted sentiment as EVs continues to attract 5% GST rate. The stock however, slipped from its September 4 highs after one of its key investors, SoftBank sold stake in the company. Still, on a one-month basis, the stock is up 53%.
Ola recently took the top spot in monthly sales too. As per the latest Vahan data, It had sold xx vehicles in August.
Eicher Motors: Premium bikes, premium returns
Shares of Eicher Motors, maker of Royal Enfield bikes, also climbed 6.4% in the last few sessions since the GST new rates were announce. Though initially there were some concerns about the 40% tax on all bikes above 350 cc, it was not a big concern for Eicher. Only 8% of its portfolio will be seeing a tax hike while 80% gets a tax cut and thus is a beneficiary. The removal of cess is also seen as a key positive as it brings the overall tax burden lower.
The stock has added 12% in just the past five days and 20% over a month. Year-to-date, it is already up 40%. Over the longer term, it has delivered a CAGR of 25.5% in five years.
TVS Motor Company: Consistent outperformer
TVS Motor share price has also run up on the back of the GST new rates. It gained 9% in the past five days, 21% in a month, and nearly 50% year-to-date. Over the last five years, TVS has compounded at a 52% CAGR.
Tata Motors: Shares jump post GST cut
Tata Motors’ share price has climbed 4.8% gain after the GST rate cut announcement. On a monthly basis, it is up 10%.
What this means for auto investors
The GST overhaul has come at a critical time for the industry, just ahead of the festive season when sales typically peak.
While Tata Motors and M&M are immediate beneficiaries in the SUV segment, companies like Eicher and TVS are expected to shine in two-wheelers. Ancillaries such as Bharat Forge, Sona BLW, and Uno Minda, which also rallied today, are set to benefit from higher demand as volumes rise across categories.