The GST Council’s long-awaited tax overhaul has reduced GST on most auto segments from 28%+ cess to a flat 18% or 40%, effective 22 September 2025. This is expected to revive demand, especially ahead of the festive season.
NDTV Profit’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer NDTV Profit’s subscribers an opportunity to expand their understanding of companies, sectors and the economy.
Motilal Oswal Report
The GST Council has announced the much-awaited GST rate rationalization, which has largely happened on expected lines as below:
-
the majority of the auto pack would shift from a 28% GST + cess structure to an 18% flat structure;
-
all SUVs above 4mtr (and other specifications) move to a 40% rate without cess from the earlier avg of 43-50% rate;
-
two-wheelers above 350cc move to a 40% rate from earlier 31%.
The revised rates would be effective from Sep 22, 2025. While most of these measures have been on expected lines, the clarity on cessation of compensation cess and GST rate reduction for tractor parts will be an incremental key positive.
Also, the fact that the government has implemented this before the festive season is a key positive.
This is in addition to several tailwinds for the sector such as:
-
positive progress of monsoon driving up rural sentiment,
-
income tax benefits,
-
8th pay commission, and
-
interest rate cuts.
Thus, we believe the GST rate rationalization should drive a demand revival in the festival season and lead to potential re-rating within the sector.
In our assessment, the biggest beneficiaries are Hero MotoCorp, Maruti Suzuki India and Hyundai Motor India.
Note that while these stocks have moved in line with expectation, a key beneficiary is M&M (given cess clarification highlighted above). We would revisit our estimates on the sector soon.
Our top OEM picks in the sector remain Maruti Suzuki and M&M, and our top auto ancillary picks are Endurance, Samvardhana Motherson International and Happy Forgings.
Click on the attachment to read the full report:
DISCLAIMER
This report is authored by an external party. NDTV Profit does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of NDTV Profit.
Users have no license to copy, modify, or distribute the content without permission of the Original Owner.
. Read more on Research Reports by NDTV Profit.