GST Cuts, Policy Tailwinds Set To Revive Auto Sector Demand, Says Motilal Oswal— Top Bets: Maruti Suzuki, M&M

With a pick-up in demand, Motilal Oswal expect discounts to trend down across key segments, which should drive margin expansion going ahead. On the back of demand revival and much better earnings growth, the brokerage expects a re-rating for the sector..NDTV Profit’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer NDTV Profit’s subscribers an opportunity to expand their understanding of companies, sectors and the economy..Motilal Oswal Report.The GST Council has provided a much-needed booster shot to the auto sector by reducing the tax rates on the majority of auto segments to 18% from 28% earlier, effective September 22, 2025. The GST rate on all SUVs above 4mtr (and other specifications) has been reduced to 40% without cess from an average of 43-50% earlier. For tractor/tractor components, the rates have been cut to 5% from 12%/18% earlier. These timely rate cuts, coupled with other sectoral tailwinds like normal monsoon boosting rural sentiment, a ~100bp reduction in interest rates in CY25 so far and income tax benefits, are expected to revive demand for the auto sector from this festive season. Further, while we expect the premiumization trend to continue, we also expect small car demand to grow over a very low base. We have now raised our FY26/FY27 volume growth estimates for two-wheeler to 4%/7.5% (vs 1%/5.7% earlier), passenger vehicles to 3%/8% (vs 2%/4% earlier), CVs to 5%/7% (vs 2%/4% earlier) and tractors to 10%/6% (vs 8%/5% earlier). With a pick-up in demand, we also expect discounts to trend down across key segments, which should drive margin expansion going ahead. On the back of demand revival and much better earnings growth, we expect a re-rating for the sector. .Our top picks among auto OEMs are Maruti Suzuki (new launches and export ramp-up to drive 16% earnings growth) and M&M (new launches and positive rural sentiment to drive 20% earnings growth). We also like Hyundai, Hero MotoCorp and Ashok Leyland. We maintain our Sell on Eicher Motors. We have a Neutral rating on Tata Motors, Bajaj Auto and TVS..Click on the attachment to read the full report:.Waaree, Premier Energies Gets Yes Securities 'Buy' Rating As It Initiates Coverage — Check Target Price.DISCLAIMERThis report is authored by an external party. NDTV Profit does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of NDTV Profit..Users have no license to copy, modify, or distribute the content without permission of the Original Owner.

GST Cuts, Policy Tailwinds Set To Revive Auto Sector Demand, Says Motilal Oswal— Top Bets: Maruti Suzuki, M&M

Motilal Oswal maintains Sell rating on Eicher Motors, has a Neutral rating on Tata Motors, Bajaj Auto and TVS.

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