Nifty auto surges over 4.5% after the expectations Modi’s speech, Expectations of GST Cut for Small Cars.
Government of India proposed a GST cut on small cars to 18% from 28% on both petrol and diesel cars and it can possibly extended to benefit two wheelers.
This GST cut can increase demand and boost auto segment sales, makes small cars most affordable and attracts people to buy.
For example: A GST Cut of 9-10% can easily make cars 40k-50k cheaper assuming car price as Rs.6Lakhs.
This can increase sales especially in entry level cars, as well as decrease EMI burden on middle class, even a 3-5k decrease in EMI can make big difference for the buyer.
Increase in demand boost sales and can increase companies EBITDA Margins. This increase the weightage of FII’s and domestic Institutional Investors in auto stocks
Not only auto stocks this also boosts demand for auto parts makers like samvardhana motherson, Bharat forge
Brokerages like Citi and Motilal Oswal expects an increase of 8-10% of earnings per share (EPS) in FY26-27 for auto companies.
Top Auto stocks Gainers currently trading at:
- Hyundai motors- up 8.5%
- Maruti Suzuki – up 8.4%
- TVS motors- up 6.7%
- Hero MotoCorp -up 6.4%
—Disclaimer: The information provided in this article is for educational and informational purposes only.