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In total, Indian auto companies—beyond just those in the Nifty Auto index—have added close to $33 billion in Mcap in less than a month
Auto Stocks Rally
India’s automakers, led by Mahindra & Mahindra Ltd., have emerged as the biggest beneficiaries of recent goods and services tax (GST) reforms, with expectations of a sales boost improving their earnings outlook.
Since Prime Minister Narendra Modi announced his government’s plan to rationalise GST, the Nifty Auto index has rallied 12.5%. In contrast, the benchmark Nifty 50 has gained just 1% during the same period, as wider market sentiment remained weighed down by the imposition of 50% US tariffs on August 27.
Mahindra & Mahindra, which has a diverse portfolio ranging from SUVs to tractors and farm equipment, has led the charge with its stock climbing more than 15% this month. Other auto majors, including Eicher Motors Ltd. and TVS Motor Co. Ltd., have also posted strong gains.
In total, Indian auto companies—beyond just those in the Nifty Auto index—have added close to $33 billion in market capitalisation in less than a month, according to BSE data.
The rally comes on the heels of a major tax reform announced by the GST Council, headed by Finance Minister Nirmala Sitharaman, on September 4. The Council cut GST rates by at least 10 percentage points on hundreds of items, in the most sweeping reform since GST was rolled out in 2017.
Under the new regime, GST on small cars (under 4 metres in length, with petrol engines up to 1,200 cc and diesel engines up to 1,500 cc) has been reduced to 18% from 28%. Meanwhile, SUVs will now face a flat 40% GST, compared to the earlier structure of 28% GST plus a cess that pushed effective taxation as high as 50%.
“Exciting times lie ahead for the auto sector,” Shashank Kanodia, analyst at ICICI Securities, told Bloomberg. He expects a significant demand boost in price-sensitive categories such as entry-level cars, as automakers start passing on the benefits of the tax cuts to consumers.
Aparna Deb is a Subeditor and writes for the business vertical of News18.com. She has a nose for news that matters. She is inquisitive and curious about things. Among other things, financial markets, economy, a…Read More
Aparna Deb is a Subeditor and writes for the business vertical of News18.com. She has a nose for news that matters. She is inquisitive and curious about things. Among other things, financial markets, economy, a… Read More
September 09, 2025, 14:36 IST
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