M&M shares soar 7%, while other OEMs struggle to hold the gains; here is why

After the GST rate rationalisation, auto stocks see increased investor interest with the new rate structure offering a significantly lower GST rate. The NIFTY Auto index opened over 3.5% higher on Thursday morning following the GST boost. Among all other stocks, M&M and Eicher Motors were the top two gainers from the index. Shares of M&M jumped nearly 7% to hit an intraday high of ₹3,550 apiece on the NSE. Shares are currently trading 6.4% higher at ₹3,494 apiece. While other car manufacturers pared the early morning gains to trade in green with gains of up to 1%.

Judicious mix of passenger car portfolio

At the consolidated level, M&M’s passenger vehicle or automotive segment contributes 57% of the total revenue. In Q1FY26, the automotive segment revenue stood at ₹25,999 crore, up by 31% YoY. Primarily, M&M's strength lies in large cars and SUVs, in which it has a bigger share of the total Industry. Hence, the new GST rates benefit for cars below 1200 cc and 4000mm engine displacement is very minimal. However, with the abolishment of additional cess on the high-end luxury cars, large cars and SUVs, the new GST rate of 40% is less than the previous effective GST rate of 50%, which included additional cess. In addition, the company’s increased EV portfolio will also prove to be beneficial as it attracts only 5% GST and no additional cess.

Dominant market share in the tractor portfolio

Apart from the automotive car division, the tractor portfolio contributes nearly 24% to the consolidated revenue for Q1FY26. According to the new GST reforms, tractors now attract 5% GST, down from 12% earlier. This provides an additional boost to the already thriving farm equipment business. According to the latest Q1FY26 investor presentation, M&M holds a 45.2% market share in tractors, which is the highest ever market share the company has achieved. With a dominant market position and reduced tax burden, the farm business will also get a boost to the overall company earnings

Management commentary

The move makes tractors and farm machinery more affordable for farmers, reduces costs for commercial vehicles and improves accessibility for personal mobility through rationalisation of rates across all SUVs. Together, these measures are expected to stimulate demand and drive inclusive growth across the entire ecosystem,” Rajesh Jejurikar, ED & CEO -Auto and Farm Sector, M&M, said.

The continuation of the 5% GST rate on EVs is a critical enabler of India’s clean mobility vision. This measure will further accelerate the adoption of electric vehicles and reinforce India’s leadership in sustainable, green transportation, Jejurikar said.

In summary, the sharp surge in M&M’s share price today in comparison to the warm response of other car manufacturers is led by its diversified portfolio of auto and farm businesses.