Auto Stocks To Watch: From M&M To Eicher, Auto Shares Rev Up On GST Tax Cuts

Auto Stocks To Watch: Auto stocks jumped sharply on Thursday morning after the GST Council announced a major overhaul of the Goods and Services Tax (GST) system.

The new rules will make small cars, entry-level bikes, and many other vehicles cheaper. Investors welcomed the move, pushing auto shares higher across the market.

Auto Stocks Price Today

Mahindra & Mahindra (M&M) was the biggest gainer, climbing nearly 8 per cent in early trade. Eicher Motors rose by more than 5 per cent, TVS Motor Company was up over 4 per cent, and Hero MotoCorp gained more than 3 per cent.

Among tyre makers, MRF surged 3.39 per cent, Apollo Tyres added 2.49 per cent, and Bajaj Auto advanced 2.56 per cent. Tata Motors also gained 2 per cent.

The rally was reflected in sector indices. The BSE Auto index jumped 1.37 per cent to 58,523.02, while the Nifty Auto index rose 1.50 per cent to 26,162.80.

Broader markets were strong too, with the Sensex up 888.96 points at 81,456.67 and the Nifty climbing 265.7 points to 24,980.75.

The GST Council has simplified the tax structure by reducing the slabs to just two, 5 per cent and 18 per cent, effective from September 22, the start of the Navratri festival. For the automobile industry, this change is highly significant.

Under the new rules, petrol, LPG, and CNG cars with engines less than 1,200cc and a length under 4,000mm will be taxed at 18 per cent instead of 28 per cent. Diesel cars with engines up to 1,500cc will also move to the 18 per cent bracket.

Motorcycles up to 350cc will now attract 18 per cent GST, down from 28 per cent. Small hybrid cars will benefit too, while electric vehicles will continue at the low 5 per cent rate.

What Axis Securities Said?

On the other hand, larger cars, SUVs, luxury vehicles, and motorcycles above 350cc will be charged a higher 40 per cent tax. This shows the government’s intent to encourage affordable and fuel-efficient mobility while keeping luxury segments taxed at higher levels.

According to Axis Securities, these changes are a big positive for auto makers. Lower taxes on entry-level bikes and small cars are expected to boost sales in rural and middle-class households. Companies like Hero MotoCorp, Bajaj Auto, TVS Motor, and Eicher Motors are likely to benefit from two-wheelers.

Also Read: GST Rate Changes 2025: Every FAQ Answered Ahead Of September 22 Rollout

In passenger vehicles, Maruti Suzuki, Tata Motors, and Mahindra & Mahindra are the biggest winners as they sell a large share of small and compact cars.

Commercial vehicles are also set to get cheaper, with GST cut from 28 per cent to 18 per cent. This is a strong boost for Ashok Leyland, Tata Motors, and Eicher Motors. Hydrogen-based commercial vehicles will enjoy an even lower 5 per cent tax, which could drive investment in green transport.

Farm equipment will also gain. Tractors and smaller machines now attract only 5 per cent GST. This benefits companies like Escorts, M&M, and VST Tillers, which are heavily dependent on rural demand.

Auto part makers are also expected to benefit. GST on tyres and many spare parts has been reduced, helping companies like Uno Minda, Minda Corp, Endurance Tech, Exide, and Amara Raja.

Axis Securities believes the auto sector is one of the biggest winners of GST 2.0. While luxury car makers may face a drag due to the 40 per cent tax, most other players will enjoy higher volumes.

The firm expects the real boost to earnings and stock prices to be visible from the second half of FY26, as demand fully recovers.

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