Auto stocks fall for 4th out of 5 sessions even as brokerages remain bullish after GST 2.0

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Auto stocks: Brokerages says the recently announces GST reforms will boost the sector.

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The shares of several heavyweight automakers dropped in trade on September 15, pushing the Nifty Auto index down into the red for the fourth out of five consecutive sessions.

The sectoral index fell nearly 0.3 percent (over 72 points) to 26,794 in the afternoon. This comes despite brokerages remaining bullish over the sector’s prospects.

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HSBC on auto sector:

HSBC in its latest report said that GST-driven price cuts announced by the automakers will boost their CAGR by 200-300 basis points over the next four-five years. The international brokerage noted that the auto stocks have jumped 6-17 percent since the centre’s GST revision announcement in August. It added that this will likely track earnings growth.

Growth could be front-loaded, HSBC said while raising FY27-28 EPS estimates across companies by 4–14 percent. Here are the latest rating and target prices set by the international brokerage:

Maruti Suzuki – Buy call, Target price at Rs 17,000 per share
Hyundai Motor India – Buy call, Target price at Rs 2,800 per share
TVS Motor – Buy call, Target price at Rs 4,000 per share
M&M – Buy call, Target price at Rs 4,000 per share
Ather Energy – Buy call, Target price at Rs 600 per share

InCred on autos:

InCred sees GST rate cuts and cess withdrawal as biggest stimulus for auto sector in recent history. It said that these could trigger a two-three year cyclical recovery. The domestic brokerage raised domestic auto volume forecasts by 300 bps to 11 percent for FY26, and by 500 bps to 15 percent for FY27, led by passenger vehicles.

InCred has upgraded its ratings on Apollo Tyres, Escorts Kubota, M&M and Tata Motors.

Nomura on autos:

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Nomura said the GST cuts are leading to early signs of demand recovery. It prefers M&M, Hyundai, TVS Motor and Ashok Leyland among the stocks.

Mahindra & Mahindra (M&M), Eicher Motors and Bosch shares dropped more than 1 percent each. Ashok Leyland, Exide Industries, Hero MotoCorp, Maruti Suzuki, Tata Motors, TVS Motor and Bajaj Auto shares were trading in the red with marginal losses.

Bucking the trend, Tube Investments of India shares gained nearly 4 percent. Samvardhana Motherson shares jumped nearly 3 percent after CLSA kept an ‘Outperform’ call on the stock, and raised its target price to Rs 124 per share. This implies an upside potential of more than 18 percent from the stock’s previous closing price of Rs 104.69 apiece.

MRF and Balkrishna Industries shares were up around 1 percent each, while Bharat Forge shares were trading in the green with marginal gains.

Also read: Our LIVE blog on stock market updates

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