Auto Stocks Rally as GST 2.0 Slashes Taxes; Tata Motors and M&M Lead Gains

Strategic Insights -

Investors cheered the recent announcement of GST 2.0, which has simplified the tax structure for the auto sector, slashing taxes from 28% to 18% for cars and 40% for SUVs and luxury cars. The new rates, effective from September 22, have led to a significant price cut for several auto companies, including Tata Motors and M&M. As a result, the auto sector stocks have seen a surge, with the Nifty Auto index rallying over 3% on September 8.

Key Takeaways:

  • Tata Motors announced that it will pass on the benefits of GST 2.0 to its customers, with prices coming down by up to Rs 1.55 lakh from September 22.
  • M&M extended the price cut benefit from September 6, with its popular SUVs becoming cheaper by Rs 1.01 lakh to Rs 1.56 lakh.
  • The five-star performers in the auto sector include Mahindra & Mahindra, Ola Electric, Eicher Motors, TVS Motor Company, and Tata Motors.
  • M&M's share price has surged 6.4% from September 4 levels, with a 16% gain over the past one week, making it a beneficiary of the SUV tax cuts.
  • Ola Electric's share price has been volatile, but it remains up 53% on a one-month basis, with the company selling xx vehicles in August.
  • Eicher Motors has seen a 12% gain in the past five days and 20% over a month, with 80% of its portfolio benefiting from the tax cut.
  • TVS Motor Company has gained 9% in the past five days, 21% in a month, and nearly 50% year-to-date, with a CAGR of 52% over the last five years.
  • Tata Motors' share price has climbed 4.8% gain after the GST rate cut announcement, with a 10% gain on a monthly basis.

Statistics:

  • The Nifty Auto index rallied over 3% on September 8.
  • The new GST rates have simplified the tax structure to a 2-rate structure, with a 5% GST rate for electric vehicles.
  • The cess component is done away with for all vehicles.
  • Ola Electric sold xx vehicles in August, and its share price is up 53% on a one-month basis.
  • Eicher Motors has delivered a CAGR of 25.5% in five years, while TVS has compounded at a 52% CAGR.
  • The festive season is expected to boost sales, with the auto sector stocks expected to shine in the coming months.

Sources:

  • "Auto stocks rally as GST 2.0 slashes taxes; Tata Motors and M&M lead gains" by IE Online Media Services Pvt. Ltd., distributed by Contify.com
  • Financialexpress.com
  • Vahan data
  • IE Online Media Services Pvt. Ltd., distributed by Contify.com