Nomura bets on M&M, Hyundai, TVS, Ashok Leyland as GST cuts boost auto stocks, demand

Channel checks show dealers reporting higher footfalls and bookings ahead of Navratri.

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Global brokerage Nomura has picked Mahindra & Mahindra, Hyundai Motor India, TVS Motor, Ashok Leyland, Motherson Sumi and CEAT as its top beneficiaries from the recent Goods and Services Tax (GST) rate cuts on automobiles.

According to ETMarkets, In a research note released on September 15, Nomura said the policy change has energised the sector, lifting consumer sentiment, improving affordability and setting the stage for stronger festive season sales.

Performance across segments

Maruti Suzuki, which has already passed on the rate cuts to buyers, reported a 15 per cent rise in enquiries and 1.5 lakh bookings since the announcement. “We anticipate festive sales rising 15–20 per cent,” said Partho Banerjee, Maruti’s head of sales and marketing, highlighting renewed demand in entry-level cars and upgrades from two-wheeler owners. Hyundai Motor India COO Tarun Garg said the biggest momentum is expected in sub-₹10 lakh SUVs, which account for 60 per cent of the company’s sales. “Industry sales declined 2 per cent in April–August, but demand could rebound to 5 per cent on-year growth for the rest of the year,” he said, adding that the company’s EV penetration rose to 6 per cent in August. Commercial vehicle maker Ashok Leyland also expects to gain from overdue fleet replacement. “The GST cut makes vehicles more affordable for operators, supporting volumes by reducing prices and spurring freight activity,” MD & CEO Shenu Agarwal said. The company is expanding bus capacity from 950 to 1,650 units a month, with mid-single digit growth projected for medium and heavy trucks. Two-wheeler majors Bajaj Auto and Royal Enfield have also announced direct price cuts. Bajaj Auto MD Rajiv Bajaj welcomed the move as “much-needed,” though he noted that bikes above 350cc remain outside the ambit. Royal Enfield said its 350cc range would become up to ₹22,000 cheaper, aimed at attracting more first-time buyers.

Channel checks show dealers reporting higher footfalls and bookings ahead of Navratri. Nomura estimates FY26 volume growth at 8 per cent for passenger vehicles and 10 per cent for two-wheelers, with improved operating leverage boosting margins.