India’s auto sector is gearing up for a potential re-rating as multiple growth triggers align at the same time. According to Morgan Stanley, deep GST rationalisation, expected monetary easing, and the rollout of the Eighth Pay Commission could spark one of the strongest demand cycles the industry has seen in years.
The brokerage believes that these changes will not only make vehicles more affordable for consumers but also help auto companies expand margins and strengthen their long-term growth prospects.
Historically, valuations in the auto sector have peaked during periods of strong margins. With cost benefits from GST cuts and improving fundamentals, Morgan Stanley expects the current cycle to surprise on the upside. Leading players such as Mahindra & Mahindra, TVS Motor, and Eicher Motors are already gaining market share, and lower vehicle prices could accelerate this trend further, creating strong opportunities for investors.
GST Cuts Set to Rev Up Auto Demand
- Two-Wheelers (up to 350 cc): GST down to 18% (from 28%)
- Small Cars (up to 1,200 cc): GST reduced to 18% (from 28%)
- Large Cars: Flat 40% GST, no cess
- Tractors (<1800 cc): 5% (from 12%)
- Road Tractors (>1800 cc): 18% (from 28%)
- Tractor Parts: 5% GST
- Buses (10+ seats): 18% (from 28%)
- Commercial Vehicles (trucks, delivery vans, etc.): 18% (from 28%)
- Auto Components: Flat 18% GST
Here are a few Auto Stocks to buy for an upside potential of 20 percent given by Morgan Stanley
Maruti Suzuki India Limited
With a market capitalization of Rs. 482,966.37 crore, the shares of Maruti Suzuki India Limited closed at Rs. 15,361.40 per equity share, rising nearly 0.68 percent from its previous day’s close price of Rs. 15,258.10.
Morgan Stanley, a prominent brokerage firm, has recommended an “Overweight” call on Maruti Suzuki India Limited with a target price of Rs. 18,360 per share, indicating an upside potential of 20.33 percent from its previous day’s close price of Rs. 15,258.10.
Maruti Suzuki India Limited was established in 1981 and is India’s largest automobile manufacturer, known for affordable, reliable cars. It began as a government-Suzuki joint venture and revolutionized Indian car ownership with models like Maruti 800. It dominates the passenger vehicle market, offering a wide range of cars.
Hyundai Motor India Limited
With a market capitalization of Rs. 206,048.23 crore, the shares of Hyundai Motor India Limited closed at Rs. 2,535.85 per equity share, down nearly 0.76 percent from its previous day’s close price of Rs. 2,555.20.
Morgan Stanley, a prominent brokerage firm, has recommended an “Overweight” call on Hyundai Motor India Limited with a target price of Rs. 3,066 per share, indicating an upside potential of 19.99 percent from its previous day’s close price of Rs. 2,555.20.
Hyundai Motor India Limited was established in 1996 as a wholly owned subsidiary of Hyundai Motor Company, South Korea. It quickly became India’s second-largest car manufacturer, launching the popular Hyundai Santro in 1998. It is a major exporter and key player in the Indian automobile market.
Mahindra and Mahindra Limited
With a market capitalization of Rs. 459,658.00 crore, the shares of Mahindra and Mahindra Limited closed at Rs. 3,696.40 per equity share, down nearly 0.17 percent from its previous day’s close price of Rs. 3,702.60.
Morgan Stanley, a prominent brokerage firm, has recommended an “Overweight” call on Mahindra and Mahindra Limited with a target price of Rs. 4,321 per share, indicating an upside potential of 16.70 percent from its previous day’s close price of Rs. 3,702.60.
Mahindra and Mahindra Limited started in 1945 as a steel trading company. It grew into a big company making tractors and vehicles. It is the world’s largest tractor maker and India’s top SUV maker, serving customers in many industries and countries with reliable products.
Ashok Leyland Limited
With a market capitalization of Rs. 79,315.60 crore, the shares of Ashok Leyland Limited closed at Rs. 135.05 per equity share, down nearly 1.64 percent from its previous day’s close price of Rs. 137.30.
Morgan Stanley, a prominent brokerage firm, has recommended an “Overweight” call on Ashok Leyland Limited with a target price of Rs. 152 per share, indicating an upside potential of 10.71 percent from its previous day’s close price of Rs. 137.30.
Ashok Leyland Limited started in 1948 in Chennai as Ashok Motors. It began by assembling Austin cars and later focused on making trucks and buses. The company became Ashok Leyland in 1955 through a partnership with British Leyland. It is now India’s second-largest commercial vehicle maker, with products including trucks, buses, defense vehicles, and engines.
TVS Motor Company Limited
With a market capitalization of Rs. 169,411.31 crore, the shares of TVS Motor Company Limited closed at Rs. 3,565.90 per equity share, down nearly 0.67 percent from its previous day’s close price of Rs. 3,590.10.
Morgan Stanley, a prominent brokerage firm, has recommended an “Overweight” call on TVS Motor Company Limited with a target price of Rs. 3,933 per share, indicating an upside potential of 9.55 percent from its previous day’s close price of Rs. 3,590.10.
TVS Motor Company Limited was founded in 1978. It started as a joint venture with Suzuki and began making motorcycles and mopeds. The company is now one of India’s top two- and three-wheeler manufacturers, selling products in over 60 countries with advanced technology and quality.
Hero MotoCorp Limited
With a market capitalization of Rs. 108,492.80 crore, the shares of Hero MotoCorp Limited closed at Rs. 5,422.80 per equity share, down nearly 0.33 percent from its previous day’s close price of Rs. 5,440.50.
Morgan Stanley, a prominent brokerage firm, has recommended an “Equalweight From Underweight” call on Hero MotoCorp Limited with a target price of Rs. 5,968 per share, indicating an upside potential of 9.70 percent from its previous day’s close price of Rs. 5,440.50.
Hero MotoCorp Limited started in 1984 as Hero Honda, a joint venture between Hero Group and Honda. It became India’s largest two-wheeler maker, making motorcycles and scooters. In 2011, it became independent and was renamed Hero MotoCorp, expanding globally with advanced vehicles.
Eicher Motors Limited
With a market capitalization of Rs. 188,526.35 crore, the shares of Eicher Motors Limited closed at Rs. 6,873.55 per equity share, up nearly 0.88 percent from its previous day’s close price of Rs. 6,813.75.
Morgan Stanley, a prominent brokerage firm, has recommended an “Equalweight From Underweight” call on Eicher Motors Limited with a target price of Rs. 7,201 per share, indicating an upside potential of 5.68 percent from its previous day’s close price of Rs. 6,813.75.
Eicher Motors Limited started in 1948 as Goodearth Company, selling tractors. Founded officially as Eicher Motors in 1982, it makes motorcycles and commercial vehicles. It owns Royal Enfield and partners with Volvo for trucks and buses, serving India and global markets.
Written By – Nikhil Naik
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