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

Lower rates and uniform duties support mass-market recovery and festive-season sales.

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Shares of Mahindra & Mahindra surged as much as 7.8 per cent to ₹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 per cent after the GST Council collapsed the existing four-rate structure into two slabs, 5 per cent and 18 per cent, while maintaining a special 40 per cent 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 per cent GST, down from 28 per cent, while diesel cars up to 1,500cc also move into the lower slab. Larger SUVs will be taxed at 40 per cent, compared with 43-50 per cent 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 per cent 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 per cent rate from 50 per cent earlier, and the rest to 18 per cent from 28 per cent. The brokerage said the changes could lift auto demand by 5-10 per cent across categories, while a sharp cut in tractor GST—from 12 per cent to 5 per cent—provides a strong rural boost.

Industry implications

The Council’s move to impose a uniform 18 per cent rate on all auto components also removes inverted duty structures, which brokerages said will support domestic suppliers. Electric vehicles remain taxed at 5 per cent, 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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