Samvat 2083: Can Auto Stocks Beat The GST Hangover After An 82% Rally And 35% Crash?

The auto sector to enter Samvat 2083 on a mixed note. The Nifty Auto index is down 4% over Samvat 2082, but the movement in individual stocks has been far from uniform.

Sona BLW Precision Forgings emerged as the biggest gainer, surging 82%, while Tata Motors Passenger Vehicles was the worst performer, plunging 35%.

With Samvat 2083 beginning on Sunday, November 8, investors will closely watch whether the auto sector can regain momentum or face another challenging year.

The outlook, meanwhile, will depend on how automakers make way through the high base created by last year's GST rate cuts, lower festive discounts and rising raw material costs.

Samvat 2082: Sona BLW Soars 82%, Tata Motors PV Falls 35%

Sona BLW Precision Forgings was the top gainer among the auto stocks tracked, skyrocketing 82% during Samvat 2082. Samvardhana Motherson International (SAMIL) followed closely with a 50% gain, while Bharat Forge rallied 35%.

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On the flipside, Tata Motors Passenger Vehicles (TMPV) led the losses, falling 35%. Tube Investments of India tanked 31%, while Maruti Suzuki fell 28%. Mahindra & Mahindra (M&M) and Hyundai Motor India also shed 18% each.

What Drove Auto Stocks In Samvat 2082?

The auto sector, analysts believe, received a demand boost from the GST rate cuts introduced in October last year. Lower vehicle prices encouraged first-time buyers and customers who had been postponing purchases to return to showrooms.

Rural demand also remained strong, aiding sales across small cars and SUVs. Meanwhile, higher fuel prices encouraged greater adoption of electric vehicles (EVs) and CNG-powered vehicles.

Combination of aforementioned factors supported vehicle demand through much of the period, helping several auto companies deliver robust sales and stock performance.

Samvat 2083 Outlook: Three Challenges Auto Stocks Need To Watch

The demand environment is likely to become more challenging in the coming Samvat (2083) as the sector faces a higher base.

1. GST rate cut base effect: The strong demand boost following the GST rate cuts could make YoY growth comparisons tougher in the second half of FY27 (H2FY27). The sector will have to sustain sales momentum without the same level of support from lower vehicle prices.

2. Lower festive discounts: Discounts offered by automakers have come down this festive season. Maruti Suzuki management has indicated that discounts declined 35% YoY. Lower discounts could affect affordability and buying decisions, particularly if customers become more cautious.

3. Rising raw material costs: Further vehicle price increases to offset higher raw material costs could put pressure on demand. Automakers will have to balance cost pass-through with affordability, especially in price-sensitive segments.

Samvat 2083: Five Auto Stocks With The Highest Return Potential

Despite the challenges, select auto stocks are seen offering solid upside potential based on the estimates. Tube Investments of India tops the list, with an estimated return potential of 56%. M&M follows with 41%, while Tata Motors Passenger Vehicles has an estimated upside potential of 36%.

Maruti Suzuki and Ashok Leyland round out the list, with estimated return potential of 26% and 25%, respectively.

That said, the forthcoming Samvat could therefore be a test of stock selection in the auto sector.

After a year in which the index fell but individual stocks delivered returns ranging from an 82% rally to a 35% decline, investors will look out for pickearnings growth, demand trends and cost pressures to pick the next set of outperformers.

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