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Auto stocks rally today: Auto stocks soared on September 8 after several leading automakers announced substantial price cuts, following the GST Council’s decision to reduce taxes on a range of vehicles. The move sparked investor optimism and sent the Nifty Auto index climbing over 1.5 per cent in morning trade, reaching 26,718, making it the top sectoral gainer on the stock market today.
Among the biggest movers, Bharat Forge and Ashok Leyland shares surged by around 4 per cent each, leading the rally.
The sentiment was further boosted after Bank of America (BofA) raised target prices across several auto stocks, citing significant upside potential stemming from the GST cuts.
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Tata Motors, M&M Announce Price Reductions
Tata Motors shares gained nearly 3 per cent, trading at Rs 712 apiece. The company announced on September 5 that it will pass on the full benefits of the GST reduction to customers across its cars and SUVs, with price cuts of up to Rs 1.55 lakh, effective from September 22.
Mahindra & Mahindra (M&M) shares jumped around 2 per cent, trading at Rs 3,629. M&M said it will immediately pass on the GST 2.0 benefits across its ICE SUV lineup. Models like the Thar, Scorpio, Bolero, and XUV700 will now come with savings ranging from Rs 1.01 lakh to Rs 1.56 lakh, depending on the variant.
BofA upgraded its target price for M&M from Rs 3,750 to Rs 4,000, maintaining its ‘Buy’ rating. This reflects an upside potential of over 12 per cent from the previous close of Rs 3,561.30.
Broader Auto Rally
Shares of Samvardhana Motherson rose nearly 2 per cent, while Bajaj Auto gained around 1.5 per cent. Other notable gainers included Bosch, TVS Motor, Balkrishna Industries, and Hero MotoCorp, all rising more than 1 per cent.
BofA also raised target prices for two-wheeler makers while maintaining a ‘Neutral’ stance. It raised Bajaj Auto’s target to Rs 9,600, TVS Motor’s to Rs 3,725, and Hero MotoCorp’s to Rs 5,650, according to a brokerage note cited by NDTV Profit.
Maruti Suzuki: More Cuts Expected
Shares of Maruti Suzuki rose nearly 1 per cent, even though the company hasn’t officially announced price cuts. BofA raised its target price on Maruti from Rs 14,000 to Rs 17,000, reiterating a ‘Buy’ rating. Domestic brokerage ICICI Securities echoed the view, also setting a Rs 17,000 target. This implies an upside of more than 14 per cent from Maruti’s previous closing price of Rs 14,895.
Eicher Motors Gains Modestly
Eicher Motors was trading with marginal gains. However, BofA increased its target price for the stock to Rs 7,500, indicating an upside of nearly 14 per cent from the previous close.
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