GST2.0 effect: M&M, Hyundai, TVS & Ashok Leyland best placed this festive season, says Nomura

International brokerage firm Nomura has placed its bets on Mahindra & Mahindra, Hyundai Motor India, TVS Motor, Ashok Leyland, Motherson Sumi, and CEAT as top picks to benefit from India’s recently announced GST rate cuts on automobiles. In a research note released September 15, the brokerage highlights that policy action has galvanised the entire auto sector, leading to a spike in consumer interest, improved affordability, and brighter prospects for volume growth as the festive season nears.

Automakers moved swiftly to pass on the GST reduction to buyers, with Maruti Suzuki reporting a surge in customer enquiries and an impressive 1,50,000 bookings since the announcement. “Enquiries are up 15%. We anticipate festive sales rising 15-20%,” said Partho Banerjee, Maruti’s head of sales and marketing, pointing to renewed interest in entry-level vehicles and expectations that many two-wheeler owners may upgrade to cars.

Hyundai Motor India, another Nomura favourite, says the real momentum will be seen in sub-Rs 10 lakh SUVs—a category that constitutes 60% of its sales. “Industry sales declined by 2% in April-August, but demand could rebound to 5% on-year growth for the rest of the year,” said COO Tarun Garg. Hyundai’s EV penetration also saw a jump to 6% in August, signifying a bigger consumer shift.


Also read: Urban Company allotment status out, listing tomorrow. What to expect

Ashok Leyland expects commercial vehicles to be the largest beneficiary. MD & CEO Shenu Agarwal cited overdue fleet replacement as a likely trigger for growth, noting the average fleet age has extended to 10 years. The GST cut, he said, would make vehicles more affordable for operators, “supporting volumes by reducing prices and spurring freight activity.” The company plans to expand bus production capacity from 950 to 1,650 units a month, with mid-single digit growth expected in medium and heavy commercial vehicles.

The two-wheeler segment is also receiving a boost, with Bajaj Auto and Royal Enfield announcing they will pass on the benefits directly to consumers. Rajiv Bajaj, Bajaj Auto MD, called the GST cut “much-needed” but lamented that motorcycles over 350cc remain excluded—a missed opportunity. Royal Enfield’s 350cc models will now be up to Rs 22,000 cheaper, aiming to draw more first-time buyers.

The brokerage added that channel checks indicate dealers are already seeing a sharp pickup in enquiries and footfalls at showrooms. Bookings are rising ahead of the festive period, and delivery momentum is expected to accelerate, particularly around Navratri. The brokerage forecasts a shift from hatchbacks to compact SUVs, with segment-wise volume growth for FY26 estimated at 8% for passenger vehicles and 10% for two-wheelers, and operating leverage and margins expected to expand for top manufacturers.

Read more: This smallcap stock jumps 40% in just 5 trading sessions. Should you book profits?

To be sure, the Nifty Auto index has surged over 11% in the past month, with the combined market capitalisation of its 16 stocks exploding by Rs 5.13 lakh crore. Royal Enfield-maker Eicher Motors emerged as the biggest winner with a blistering 19% gain.

At about 2 pm, shares of M&M were trading at Rs 3,577, higher by 1.4% from the last close on the NSE. Hyundai shares rose to Rs 2,577, higher by 1.2% on the NSE. Eicher Motors’ stock was up 2%, while TVS Motor Company and Bajaj Auto traded 1% and 0.4% higher, respectively.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)