After rationalisation of GST rates, investors’ interest in auto stocks has increased with a significant reduction in GST rates in the new rate structure. The Nifty Auto index opened with a gain of over 3.5% on Thursday morning after the GST hike. Among all other stocks, M&M and Eicher Motors were the top two gainers on the index. M&M shares rose nearly 7% to hit a high of ₹3,550 per share on the NSE. The stock is currently trading 6.4% higher at ₹3,494 per share. While other carmakers are trading in the green with gains of up to 1%, trimming the morning gains.
Prudent mix of passenger car portfolio
At the consolidated level, M&M’s passenger vehicle or automotive segment contributes 57% to total revenue. In Q1 FY26, the automotive segment revenue stood at ₹25,999 crore, up 31% from the same quarter last year. Primarily, M&M’s strength lies in large cars and SUVs, in which it has a major share in the overall industry. Hence, the benefit of the new GST rates for cars with less than 1200 cc and 4000 mm engine displacement is minimal. However, with the elimination of additional cess on high-end luxury cars, large cars and SUVs, the new GST rate of 40% is lower than the previous effective GST rate of 50%, which included additional cess. Moreover, the company’s increased EV portfolio will also prove beneficial as it attracts only 5% GST and no additional cess.
Dominant market share in tractor portfolio
Apart from the automotive car division, the tractor portfolio contributes nearly 24% to the consolidated revenue of Q1 FY26. As per the new GST reforms, tractors will now attract 5% GST, down from 12% earlier. This will further boost the already thriving farm equipment business. As per the latest investor presentation for Q1 FY26, Mahindra & Mahindra has a 45.2% market share in tractors, the highest ever market share achieved by the company. With its dominant position in the market and low tax burden, the agri business will also drive the company’s overall earnings.
Management Comment
The move has made tractors and farm machinery more affordable for farmers, reduced the cost of commercial vehicles and improved the accessibility of personal transport by rationalising rates on all SUVs. Rajesh Jejurikar, Executive Director & CEO (Auto & Agri Sector), M&M, said, “These measures are expected to accelerate demand and drive inclusive growth across the ecosystem.”
The continuation of 5% GST rate on EVs is a key enabler of India’s clean transportation vision. Jejurikar said the measure will further accelerate the adoption of electric vehicles and strengthen India’s leadership in sustainable, green transportation.
To summarise, the sharp jump in M&M’s share price today compared to other carmakers is due to its diversified portfolio of auto and agri businesses.
