Mahindra & Mahindra shares rally 8% on GST overhaul. Is it the auto sector’s biggest winner? – Delhi News Daily

Shares of Mahindra & Mahindra surged as much as 7.8% to Rs 3,539.25 on Thursday after brokerages flagged the automaker as one of the biggest winners from India’s sweeping Goods and Services Tax (GST) overhaul. Analysts at Jefferies and Emkay Global said the tax restructuring delivers significant relief across automobiles, with SUV tax cuts a “surprise win” for M&M.

The rally in M&M mirrored broader strength in auto counters, with the Nifty Auto index advancing nearly 4% after the GST Council collapsed the existing four-rate structure into two slabs, 5% and 18%, while maintaining a special 40% levy for luxury and sin goods. The new system, branded “GST 2.0,” takes effect on September 22.

Petrol, hybrid, LPG and CNG cars under 1,200cc and 4 meters will now face an 18% GST, down from 28%, while diesel cars up to 1,500cc also move into the lower slab. Larger SUVs will be taxed at 40%, compared with 43-50% earlier, easing the burden on mass-market and premium buyers alike.

Brokerages see demand recovery

Jefferies called the GST cuts “a big positive” for the sector, saying tax reductions of 10 percentage points on two-wheelers and 11-13 points on small cars could spur a significant demand inflection. For SUVs, it highlighted a 5-10 point reduction to 40% as a “surprise win” for M&M, alongside cuts for tractors and commercial vehicles.

Emkay Global echoed the optimism, noting M&M “turns out to be the biggest beneficiary of GST cuts” within its coverage universe, with nearly two-thirds of its portfolio shifting to the 40% rate from 50% earlier, and the rest to 18% from 28%. The brokerage said the changes could lift auto demand by 5-10% across categories, while a sharp cut in tractor GST—from 12% to 5%—provides a strong rural boost.

Industry implications

The Council’s move to impose a uniform 18% rate on all auto components also removes inverted duty structures, which brokerages said will support domestic suppliers. Electric vehicles remain taxed at 5%, offering continuity for ongoing electrification efforts.Arun Agarwal, vice president of fundamental research at Kotak Securities, said lower prices should help mass-market segments recover faster, while “auto components players having higher domestic exposure will benefit from stronger OEM demand.”For M&M, brokerages said the overhaul arrives ahead of the festive season and could provide a meaningful lift in sales across SUVs, tractors and commercial vehicles.

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