Overview
- GST on small cars, two-wheelers up to 350cc and commercial vehicles was reduced to 18% effective September 22 after the 56th Council meeting, lowering ownership costs.
- The Nifty Auto Index rose about 9% after the late-August to September GST reduction but has since cooled and underperformed.
- OEMs posted double-digit year-on-year net sales growth in Q2 FY26, aided by an early festive season and post-cut footfalls, with operating leverage offsetting raw-material cost pressure on margins.
- Festive-period retail trends were uneven, as two-wheelers recorded mid-teen volume growth compared with mid-single-digit gains for passenger cars.
- Incred reiterated an Overweight stance, citing forward P/E just above the 10-year mean and expecting income-tax relief, potential rate cuts and Pay Commission pay hikes to bolster demand.