Mahindra and Mahindra’s shares rally 12% in 5 days, making investors richer by ₹46,433 crore

The auto sector has outshined its peers on the Nifty sectoral index, as investors rejoiced the new GST reforms announced on September 3. In the new tax slabs, smaller cars will see an 18% taxation, decreasing from 28%, whereas, SUVs will come see a flat 40% tax rate, instead of the previous 50% rate. The Nifty Auto gained 5.58% in the past week, and continues to rally by 2.93% in today’s trading session.

Out of all the constituents, Mahindra and Mahindra advanced sharply above its peers in the last five trading sessions by 12%. In today’s trading session, the stocks hit a new 52-week high at ₹3698.70, while rising up by 3.88% from yesterday’s closing.

 In addition to that, M&M’s market capitalisation too advanced in the past week, making investors richer by ₹46,433 crore. Its last Monday’s recorded m-cap stood at ₹4.12 lakh crore while the current total capitalisation is at ₹4.58 lakh crore.

M&M’s surge in share price could be attributed to analysts showcasing confidence in the stock. As per a Kotak Securities report, the auto company would see the maximum benefit of the GST reforms on 90% of its product portfolio, followed by Tata Motors.

SUVs previously attracted a complex GST rate of 28% and 17% to 22% compensation cess, resulting in up to 50% total taxes, the new reform eases the levies by imposing a flat 40% rate. 

For vehicles powered by petrol, LPG, or CNG with 1,200cc or below engine capacity, and length not exceeding 4,000 mm, along with diesel vehicles up to 1,500cc and 4,000 mm, will see a trim from 28% to 18% GST rate. 

Along with that, Mahindra announced on Saturday its new prices, which provides benefits of up to ₹1.56 lakh to its new customers. The company, making most of the momentum, also announced that the benefits would be put into immediate effect, from September 6. Meanwhile, other companies have fixed the same date as when the GST reforms will be put in place, i.e., from September 22.