Auto Stocks In Focus: TVS Motor, Bajaj Auto Get Target Price Hike On GST Reforms — Check Latest Rate
Auto Stocks In Focus: Post-GST revision, HSBC has raised target price for TVS Motor to Rs 3,500 and Bajaj Auto Ltd. Rs 9,700, while Eicher Motors retains a Hold rating at Rs 5,800.
The upcoming GST rate cuts can raise the medium-term industry growth by 6-8% compound annual growth rate of two-wheelers in approximately 3-5 years, according to HSBC. Despite minor concerns, the brokerage expects improvement and maintain TVS Motors Ltd. as its preferred stock in the sector.
Post-GST revision, HSBC has raised target price for TVS Motor to Rs 3,500 and Bajaj Auto Ltd. to Rs 9,700, while Eicher Motors retains a Hold rating at Rs 5,800. But, the outlook for Eicher Motors Ltd.'s Royal Enfield, however, remains highly uncertain and likely to be very volatile in the near term, the brokerage added.
Notably, during 2019 to 2025, the price of two-wheelers increased by 25-30% which likely dampened demand, but a GST rate cut is likely to revive some of this reduced demand, says HSBC.
"We estimate that replacement sales are currently contributing 70-75% of new sales, compared to the usual run-rate of 40-45%." it added "Average age of a 2W on the road is at an all-time high. Overall 2W penetration in addressable households has come down in recent years due to the increase in 2W prices," it noted.
The imminent GST cut by 10% (from 28% to 18%) can make the 2Ws a lot more affordable and help revive demand, both first-time buyers and even replacement cycle, the brokerage said. Eighth pay commission will also support from mid-2027.
''The 2W industry grew at a 2.3% CAGR over FY15-FY25, now given higher disposable consumer income, we estimate a 6-8% CAGR over FY25-FY30e", it added. Premium motorcycle makers like Eicher Motors face high uncertainty ahead of the final GST decision, with stock reactions likely to be sharp.
A uniform 18% GST up to 350cc would be a major boost, but any shift in the lower GST threshold to 250cc or 150cc, or a steep 40% GST on bikes above 250cc, could hurt RE’s positioning and growth.
For EV OEMs, the impact is mixed, a near-term setback due to ICE vehicle price cuts making EVs less competitive, but long-term gains as GST on EVs is unlikely to rise. Lower-end EVs may see demand pressure, while premium models remain resilient.
