Auto stocks in fast lane: rally up to 6%; M&M, Ashok Leyland hit new highs

In the past one month, the BSE Auto index has outperformed the market by soaring nearly 15 per cent, as compared to 1.4 per cent gain in BSE Sensex.

Shares price of auto and auto related companies

 

Shares of auto and auto-related companies were in fast lane with Mahindra & Mahindra (M&M), Ashok Leyland, TVS Motor Company and Uno Minda trading at their respective new highs, while, Bharat Forge rallied 6 per cent on the BSE in Monday’s intra-day trade on strong demand outlook.

 

Bharat Forge, Sona BLW Precision Forgings, Tata Motors, Bajaj Auto, Hero MotoCorp, Balkrishna Industries, Samvardhana Motherson International and Bosch from the BSE Auto index have rallied in the range of 2 per cent to 5 per cent.

 

Shares of Ashok Leyland surged 5 per cent to ₹137.25 in intra-day trade, surpassing its previous high of ₹134.45 touched on August 20, 2025.

 

At 10:11 AM; BSE Auto index rallied 2 per cent, as compared to 0.30 per cent rise in the BSE Sensex. In the past one month, the auto index has outperformed the market by soaring nearly 15 per cent, as compared to 1.4 per cent gain in the benchmark index. 

What's driving auto and auto ancillary stocks?

 

India’s leading passenger vehicle makers - Maruti Suzuki, Hyundai, Tata Motors, and M&M -  announced that they will pass on the full benefit of GST 2.0 rate cuts to customers. The new tax slabs, effective 22 September 2025 (6 September in case of M&M’s SUV portfolio), bring small cars down to 18 per cent GST and SUVs to 40 per cent from the earlier higher rates.

 

The GST-led price reductions across the PV sector are set to sharpen affordability and increase demand just ahead of the festive season, with potential to lift industry volumes by 8 - 10 per cent. Overall, the coordinated GST pass-through by all players is likely to trigger a volume-driven upcycle in the PV industry, helping sustain momentum into FY26, ICICI Securities said in a note.

 

Meanwhile, the rate rationalisation marks a structural positive for the auto sector. Lower GST on entry-level cars, two-wheelers, and three-wheelers should lift demand in price-sensitive segments consequent to price cuts, the brokerage firm said in sector update. 

 

Last week, the GST Council approved significant rate reductions on tyres: 1) from 28 per cent to 18 per cent for 2W, PV, and truck tyres, and 2) from 18 per cent to 5 per cent for tractor tyres. These changes are expected to improve affordability and boost demand, according to analysts at JM Financial Institutional Securities.

 

Analysts at Kotak Institutional Equities believe multiple initiatives by the government, including GST cuts, will drive auto demand. Domestic auto ancillaries are set to benefit through higher original equipment manufacturer (OEM) demand and better pricing power in replacement. Tyre and battery makers also gain from better pricing in replacement demand and better profitability through the cycle. 

 

Meanwhile, the Indian commercial vehicle industry is optimistic about growth prospects for FY26 led by steady macro-economic environment and declining interest rates. Looking ahead, sustained demand from rural areas, an anticipated revival in urban consumption, expected recovery of fixed capital formation supported by increased government capital expenditure, higher capacity utilization, and healthy balance sheets of corporates and banks are expected to support growth, Ashok Leyland said in its FY25 annual report.