Auto stocks surge on GST reforms; Mahindra shares jump nearly 8%

New Delhi: Auto stocks surged on Thursday morning trade, with Mahindra & Mahindra climbing nearly 8 per cent, as small cars and entry-level bikes are set to get cheaper with the GST Council approving a complete overhaul of the tangled Goods and Services Tax regime.

Shares of Mahindra & Mahindra jumped 7.75 per cent, Eicher Motors surged 5.39 per cent, TVS Motor Company climbed 4.20 per cent and Hero MotoCorp went up by 3.56 per cent on the BSE.

The stock of MRF rallied 3.39 per cent, Bajaj Auto edged higher by 2.56 per cent, Apollo Tyres 2.49 per cent and Tata Motors went up by 2 per cent.

The BSE auto index climbed 1.70 per cent to 58,712.10.

In the equity market, the 30-share BSE Sensex jumped 888.96 points to 81,456.67 in opening trade. The 50-share NSE Nifty surged 265.7 points to 24,980.75.

"The resolute stance on simplifying the GST structure should not be seen just as ‘tax reform’ but more as ‘growth reform’. Through simplified rates and processes, the government intends to boost consumption sentiment.

"Given the wide-ranging effect of the measures, many domestic-focused stocks are likely to benefit. Some of the key names include: Maruti, M&M, Ashok Leyland, Britannia, Ultratech, JK Cement, Havells, Voltas, Amber, Metro, Trent, LemonTree, Indian Hotels, Niva Bupa, HDFC Life, IGL, Acme Solar, Suzlon, Swiggy, Delhivery, ICICI Bank, HDFC Bank, Bajaj Finance, Shriram Finance," according to a report by Motilal Oswal Financial Services.

The GST Council approved limiting slabs to 5 per cent and 18 per cent effective from September 22, the first day of Navaratri.

Petrol, LPG and CNG vehicles of less than 1,200 cc and not more than 4,000 mm length and diesel vehicles of up to 1,500 cc and 4,000 mm length would move to the 18 per cent rate from the current 28 per cent.

Motorcycles up to 350 cc would be taxed at a lower GST of 18 per cent against 28 per cent currently.

All automobiles above 1,200 cc and longer than 4,000 mm as well as motorcycles above 350 cc and racing cars will be charged with a 40 per cent levy.

Small hybrid cars will also benefit, while EVs will continue to be charged at 5 per cent.

"All the revised GST rates are applicable from 22nd Sep’25 onwards, the day marked with the first day of the Navaratri festival. This reform aims to simplify the GST rates, ease compliance, create higher disposable income and stimulate long-term economic revival," according to a report by Axis Securities.

Some of the key sectors that could be key beneficiaries are: insurance, consumer durable, building materials, automobiles, retail, cement, FMCG, and real estate, it added.