Best Auto Stocks To Buy As Proposed GST Cut Drive Nifty Auto At 6-Month High! Maruti, Hyundai, M&M, More

Amid the buzz around Goods and Services Tax (GST) reforms, several auto stocks, including Maruti Suzuki, Tata Motors, Hero MotoCorp, Hyundai, Mahindra & Mahindra, etc, have rallied significantly over the past few trading sessions. As experts predict significant benefits of GST reforms to the auto segment, Nifty Auto is currently hovering close to its six-month high mark.

Nifty Auto has rallied around 15.31% in the past six months and by 6.32% in the past five trading sessions. The thematic index saw some range-bound movement on Wednesday as top-gaining auto stocks witnessed profit booking. Nifty Auto was up 0.01% at 25,460 points at 1 pm on Wednesday.

Top Auto Stocks To Buy

The proposed GST cut rationalisation will act as a major booster shot for the auto sector. Positive progress in monsoon, income tax benefits and interest rate cuts will act as additional favourable factors for the sector's growth in the coming months, according to Motilal Oswal brokerage firm.

The brokerage has kept a bullish stance on Maruti Suzuki, Hyundai India, Mahindra & Mahindra in the long run. In the auto ancillary sector, Motilal Oswal has picked Endurance, SAMIL, and Happy Forgings. The brokerage has given a 'Buy' rating to these auto stocks and has indicated that they can give around 15% returns in long-run.

Auto OEM's	Rating	CMP (INR)	P/E (x) FY26E	P/E (x) FY27E
Bajaj Auto	Neutral	8,588	26.6	23.8
Hero MotoCorp	Buy	4,984	20.1	18.5
TVS Motor	Neutral	3,220	48.0	40.5
Eicher Motors	Sell	5,911	31.0	30.2
Maruti Suzuki	Buy	14,075	28.5	25.9
M&M	Buy	3,381	28.3	24.7
Tata Motors	Neutral	676	14.8	13.0
Hyundai	Buy	2,427	35.7	28.7
Ashok Leyland	Buy	132	22.9	19.6
Escorts	Neutral	3,622	34.3	30.8

What Are The Proposed GST Reforms?

The central government has proposed to reduce the GST slabs to 5% and 18%, whereas a special 40% slab has been kept for miscellaneous items, reported Press Trust of India (PTI) citing sources. The government has proposed to shift most of the items in the 28% slab to the 18% slab.

GST Reforms Impact on Personal Vehicle Segment

All the personal vehicles are currently in teh 28% GST bracket includinhg smallcars. Whereas, large cars (above 4 metres) are taxed in the range of 43-50%. According to Motilal Oswal report, "the GST rates would be reduced only for small cars, while large cars are likely to be classified as "luxury" and hence would remain in the higher tax slab." The brokerage has said that the proposed transition would significantly benefit Maruti Suzuki Indsutries Limited (MSIL).

"Given that the government's target is to benefit the middle class and it would have limited fiscal room, we think large vehicles are likely to be taxed at a higher rate. Hence, we believe MSIL is likely to be one of the major beneficiaries of this move compared to peers."

GST Reforms On the Commercial Vehicle Segment

The segment is also taxed at a rate of 28% on GST. The segment will get significant benefit from the general pick-up in consumption. "However, the only pure-play CV company that would benefit from this is Ashok Leyland," added Motilal Oswal in its report.

GST Boost To Auto Ancillary

Domestic-focused auto ancillary companies will get the direct benefit of the proposed GST restructuring. "Key auto ancillaries within our coverage universe that are expected to benefit include all tyre companies, battery companies, Bosch, Endurance, Happy Forgings and MSWIL," noted Motilal Oswal adding that the final impact on auto segment would depend on global headwinds and economic scenario.

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