The Indian auto sector witnessed a significant boost as shares of major automakers rallied up to 5% following robust demand on the first day of Navratri, coinciding with the rollout of GST 2.0. The Nifty Auto index reflected this positive sentiment, gaining 2% by 9:30 am.

Market Performance

Shares of key players in the auto industry, including Maruti Suzuki, Hyundai Motor India, Mahindra & Mahindra, Eicher Motors, Tata Motors, and Hero MotoCorp, experienced substantial gains. This surge came on the back of strong sales figures and increased consumer interest, partly attributed to the implementation of the new GST regime.

Maruti Suzuki's Record-Breaking Performance

Maruti Suzuki, India's largest carmaker, reported exceptional numbers on the first day of Navratri:

• 80,000 inquiries received
• 30,000 vehicle deliveries made
• Best Navratri start in 35 years

The company has seen a significant uptick in bookings since announcing price cuts:

• 75,000 bookings received
• Average of 15,000 daily orders, 50% higher than usual
• 50% increase in small car demand

Some models are potentially facing stock shortages due to the surge in demand.

Hyundai Motor's Strong Showing

Hyundai Motor India also reported impressive figures:

• 11,000 dealer billings on Day 1
• Highest single-day performance in five years

Financial analysts have taken note of Hyundai's performance, with Nomura maintaining a Buy rating on the company and setting a target price of Rs 2,846.00.

Industry-Wide Impact

The auto sector as a whole experienced positive trends:

• Large crowds at dealerships
• Surge in online sales
• Consumers responding favorably to price cuts under the new GST regime

Market Outlook

The Nifty Auto Index has shown strong performance year-to-date, with a gain of nearly 20.00%. This recent surge in demand and stock prices indicates a positive outlook for the auto sector, particularly as the festive season gets underway.

The combination of GST 2.0 implementation and the start of Navratri appears to have created a perfect storm for automakers, driving both sales and investor confidence. As the festive season progresses, it will be interesting to see if this momentum can be sustained and how it might impact the long-term performance of the auto sector.

The Indian auto sector is poised for a significant turnaround, according to a recent analysis by Motilal Oswal. The brokerage firm anticipates a revival in demand driven by potential GST cuts and favorable policy measures, setting the stage for improved performance across the industry.

Key Factors Driving Sector Resurgence

Motilal Oswal's report highlights several factors expected to contribute to the sector's revival:

• Potential GST Cuts: Reduced Goods and Services Tax (GST) rates are seen as a major catalyst for boosting demand.
• Favorable Policy Measures: Supportive government policies are expected to create a conducive environment for growth.
• Reduced Discounts: As demand improves, a decrease in discounts across key segments is anticipated.
• Margin Expansion: The combination of improved demand and reduced discounts is expected to lead to margin expansion for auto companies.

Sector Re-rating Prospects

The positive outlook extends beyond immediate financial improvements. Motilal Oswal predicts a potential re-rating of the entire auto sector, based on two primary factors:

1. Demand Recovery: An expected uptick in consumer demand for automobiles.
2. Better Earnings Growth: Improved financial performance across companies in the sector.

Top Investment Picks

In light of these positive projections, Motilal Oswal has identified two companies as their top investment picks in the auto sector:

1. Maruti Suzuki: India's largest passenger vehicle manufacturer is well-positioned to benefit from the anticipated sector revival.
2. M&M (Mahindra & Mahindra): The diversified automaker, known for its strong presence in the SUV and tractor segments, is also expected to capitalize on the improving industry dynamics.

Conclusion

The Indian auto sector appears to be at an inflection point, with potential GST cuts and supportive policies expected to drive a significant revival. As discounts reduce and margins expand, companies like Maruti Suzuki and M&M are poised to lead the sector's growth. Investors and industry watchers will be keenly observing how these projections unfold, potentially reshaping the landscape of India's automotive industry.