HSBC said it has factored in a 200 to 300 basis points higher compound annual growth rate (CAGR) over the next four to five years across the auto segment, led by the recent GST-driven price cuts.
It said share prices of these auto companies are up between 6% and 17% since the GST revisions were announced on August 15, and post the upmove, the market is now likely to track earnings growth for these companies.The growth could be front-ended, leading HSBC to lift its financial year 2027 – 2028 earnings-per-share (EPS) estimates by 4% – 14% across companies.
HSBC preferred picks
| Company | Buy | Hold | Sell | Old TP (₹) | New TP (₹) | Upside (%) |
| Maruti Suzuki | 38 | 7 | 2 | 14,000 | 17,000 | 21.4 |
| Hyundai Motor India | 23 | 3 | 3 | 2,300 | 2,800 | 21.7 |
| TVS Motor | 27 | 9 | 6 | 3,500 | 4,000 | 14.3 |
| M&M | 42 | 1 | 0 | 3,570 | 4,000 | 12% |
| Ather Energy | 4 | 0 | 0 | 450 | 600 | 33% |
Of these, Maruti Suzuki, Hyundai and TVS Motor are its preferred picks.
GST Revision
On August 15, Prime Minister Narendra Modi, in his Independence Day speech promised the next generation GST reforms ahead of Diwali.
Earlier this month, the 56th GST Council approved the two-slab structure, scrapping the 12% and 28% GST slabs, while keeping the 5% an 18% slabs in place. It also introduced a 40% slab for luxury and sin goods.
With this, the 18% slab will include petrol, hybrid, LNG and CNG cars, motorcycles up to 350 cc, commercial vehicles, three-wheelers, tactors with engine capacity above 1,800 cc, ambulance and buses, auto parts (other than tractors) and tyres.
The 5% slab will include electric vehicles (EVs), tractors up to 1,800 cc engine capacity, tractor parts, tractor tyres and tubes, bicycles and other cycles, tanks and other armoured fighting vehicles.
Meanwhile, high-end cars, petrol cars with engine capacity above 1,200 cc, diesel cars above 1,500 cc, or length exceeding 4 metre, motorcycles above 350 cc, station wagons and racing cars will fall under the 40% slab.
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