Hyundai Motor share price jumps 10% in biggest 1-day spike since listing on potential GST cut
The surge came amid broad-based buying across auto stocks after the Indian government proposed reducing the GST rate on automobiles to 18% from the current 28%. Analysts believe the move could lead to lower prices and potentially revive sales, which have been under pressure in recent quarters due to weak urban consumption demand.
To offset sluggish domestic sales, companies like Hyundai Motor have increasingly turned to exports to sustain growth. However, the proposed GST cut came as timely relief, especially after Indian auto exports to the US were recently hit with a 50% tariff.
The proposed tax reforms also come just ahead of the festive season, a crucial period for auto sales in India. The government has been taking significant measures to revive domestic consumption, with the proposed GST reforms following earlier Union Budget measures such as income tax cuts.
Prime Minister Narendra Modi, in his Independence Day address, announced 'GST Reforms 2.0,' aimed at rationalizing rates into two slabs versus the existing four (excluding sin goods).
'Autos fall under the 28% GST bracket. If autos move to 18% and we see sharp price drops, this could drive the next auto upcycle, similar to 2008,' said Morgan Stanley.
'Currently, GST on passenger vehicles ranges from 29% to 50%, as a cess is imposed on top of GST based on the vehicle's size and engine capacity. In the new regime, the government may reduce the tax on smaller cars to 18% (from 28%) and move bigger cars to a 'special rate' of 40% while scrapping the cess. This could lower prices of smaller cars by around 8% and larger cars by 3–5%,' said HSBC.
Domestic brokerage Motilal Oswal added that nearly 99% of goods currently in the 12% slab (standard goods) may be shifted to the 5% slab, reducing retail prices by 4–5% and easing household budgets. Similarly, 90% of goods in the 28% slab are likely to move to 18%, further boosting consumption.
The proposals and finer details are likely to be approved by the GST Council in early 3QFY26. The Finance Ministry has indicated a ₹ 500 billion impact on tax revenue, which appears manageable, said the brokerage.
The stock, which made its debut on the Indian stock market in October 2024, stayed largely inactive for nearly seven months before gaining momentum in May.
This rally continued in the subsequent months, allowing it to cross its IPO price of ₹ 1,960 for the first time in early June, a level it has held since. At current levels, the stock is trading 26% higher than its IPO price.
The bullish momentum in Hyundai Motor's share price is being supported by strong technical indicators, positive outlooks from leading brokerages, and improving sentiment in the broader Indian market.
Together, these factors have helped the stock break out of its consolidation phase, delivering solid returns to IPO investors who remained invested.
Disclaimer: This story is for educational purposes only. The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
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