Mahindra & Mahindra, Eicher Motors and Maruti Suzuki were among major gainers on NSE during Friday's session. Automobile companies are set to gain from new GST slabs announced by the government. Many other sectors could see higher consumption as prices could come lower due to reduction in GST. The real impact of GST changes will be seen within two quarters. Investors are confident that some of the companies will see better revenues. Markets closed flat on Friday but the overall trend was positive during the week. TopNews has conducted detailed analysis for technical levels and news for buzzing stocks.

GST 2.0 Catalyzes Automotive Sector Renaissance

The Indian automotive industry stands at an inflection point following the GST Council's groundbreaking decision to streamline tax structures from a complex four-tier system into a simplified dual-slab framework. This policy shift, implemented on September 22, 2025, represents more than administrative efficiency—it signals a fundamental recalibration of market dynamics that promises to reshape competitive positioning across the sector.

The reforms have triggered immediate market euphoria, with automotive stocks experiencing dramatic rallies as investors price in the anticipated demand surge from reduced tax burdens. The transition from the previous 28% tax rate to 18% across various vehicle categories creates a compelling value proposition for consumers while simultaneously expanding profit margins for manufacturers.

This regulatory transformation arrives at a critical juncture when the industry grapples with evolving consumer preferences, technological disruption, and economic uncertainties. The GST restructuring provides much-needed oxygen to manufacturers who have navigated challenging market conditions over recent quarters.

Eicher Motors: Strong Stock Performance Amid Valuation Crossroads

Eicher Motors has emerged as a standout performer in the GST-driven rally, with shares soaring to unprecedented levels of ₹6,707.70 on BSE, representing a robust 5.4% single-day surge. This remarkable ascent reflects investor confidence in the company's ability to capitalize on the reformed tax environment across its diverse portfolio.

The company's financial performance provides solid foundation for this optimism. First-quarter FY26 results demonstrated resilient execution with net profit climbing 9% year-over-year to ₹1,205 crore, while revenue expanded by an impressive 15% to ₹5,042 crore. These figures underscore the strength of both Royal Enfield's premium motorcycle franchise and VE Commercial Vehicles' expanding market presence.

Avendus Securities has responded to this momentum by elevating their target price to ₹5,850, citing the company's strategic positioning and improving EBITDA per vehicle metrics. The brokerage anticipates margin stabilization around 25.5% by FY27, suggesting operational efficiency gains will sustain profitability growth beyond the current tax windfall.

However, valuation metrics present a sobering counterpoint to the euphoric price action. Current trading multiples reveal concerning premium levels, with the stock commanding a P/E ratio of 43.44 times based on trailing earnings—a significant deviation from historical norms and sector averages. The EV/EBITDA premium of 81% and Price/Sales premium of 43% suggest the market has potentially overextended in its enthusiasm.

Technical analysis reveals additional complexity, with the stock closing at ₹6,547.50 on September 5, reflecting continued positive momentum despite mixed signals from moving average indicators. Resistance levels at ₹5,575.81 and ₹5,533.45 may provide natural consolidation points as the market digests recent gains.

Mahindra & Mahindra: The GST 2.0 Champion

Among all automotive beneficiaries of the GST reforms, Mahindra & Mahindra stands uniquely positioned to capture maximum value from the regulatory shift. The stock's explosive 7.8% rally to ₹3,539.25 on September 4 reflects widespread recognition of this advantageous positioning across multiple analyst houses. On Friday, M&M closed 2.34 percent higher.

The company's strategic strength lies in its dominant presence across the most favorably impacted segments. M&M's commanding SUV market position directly benefits from what analysts describe as a "surprise win" in the tax restructuring, while its leadership in the tractor segment provides additional tailwinds from the simplified framework.

Quantifying the impact, analysts project mid to high single-digit price reductions across M&M's mass-market vehicle portfolio, creating compelling value propositions for price-sensitive consumers. The 10-13 percentage point tax reduction on small cars and SUVs represents a substantial shift in market dynamics that could accelerate demand recovery across rural and urban markets.

ICICI Direct maintains its "Buy" recommendation with a ₹3,800 target price, positioning M&M alongside Maruti Suzuki and Bajaj Auto as preferred sector selections. This endorsement reflects confidence in the company's ability to translate tax benefits into sustainable competitive advantages.

The company's exceptional long-term performance record strengthens the investment thesis. M&M has delivered an outstanding 5-year CAGR of 40.41%, establishing itself among the premier systematic investment opportunities. Recent performance metrics include 29.58% returns over the past year and 36.25% growth over six months, supported by a robust market capitalization of ₹442,889.07 crore.

Current valuation metrics appear more reasonable than sector peers, with shares trading at ₹3,561.55 as of September 6, commanding a P/E ratio of 31.52 and an attractive P/B ratio of 0.17. The stock's journey from its 52-week low of ₹2,360.45 to near its 52-week high of ₹3,578 illustrates the dramatic value creation over the past year.

Kotak Securities' Arun Agarwal emphasizes that GST cuts could generate significant price reductions, establishing conditions for robust volume recovery. Emkay Global characterizes the reforms as "contra to expectations" in their decisive favor toward M&M, while Motilal Oswal highlights the company's dual exposure advantage across SUVs and tractors.

Eternal Limited: E-Commerce Dark Horse Defies Gravity

While automotive giants capture headlines, Eternal Limited has quietly orchestrated one of the market's most impressive performances, achieving a new 52-week high of ₹334.4 amid a sustained five-day rally delivering 4.77% returns. This remarkable momentum positions the company as an unexpected standout in the e-commerce sector.

The stock's resilience becomes particularly striking when viewed against broader market performance. Eternal's 1-week return of 4.77% dramatically outpaces the Sensex's modest 1.13% gain, while its impressive annual returns of 29.15-34.42% contrast sharply with the benchmark's 1.81% decline. This relative strength suggests fundamental drivers beyond general market sentiment.

Trading activity reinforces institutional interest, with 8,433,720 shares changing hands generating approximately ₹273.66 crores in traded value on September 4 alone. Such robust liquidity indicates sustained investor engagement rather than speculative trading patterns.

Technical indicators paint a compelling picture of strength across all timeframes. The stock maintains positions above all key moving averages—5-day, 20-day, 50-day, 100-day, and 200-day—suggesting broad-based momentum that extends beyond short-term volatility. This technical configuration typically indicates strong underlying fundamentals supporting price appreciation.

However, fundamental analysis reveals concerning contradictions to the market's enthusiasm. The company reports losses and negative operating profits, raising questions about the sustainability of current valuation levels. The problematic Debt to EBITDA ratio of -1.00 times indicates significant financial stress that could constrain future growth prospects.

Technical risk signals are equally prominent, with the RSI14 indicator reaching overbought levels at 80, suggesting potential for near-term correction. Analysts recommend a stop-loss level at ₹299.01, representing a 3.72% downside buffer, while identifying support at ₹299.80 based on volume accumulation patterns.

The stock's medium-risk profile reflects daily volatility averaging 4.90%, with recent movements reaching ₹7.85 or 2.56%. This volatility profile suggests continued price sensitivity to sector developments and broader market conditions.

Strategic Investment Implications and Market Outlook

The convergence of policy reform, corporate performance, and market dynamics creates a complex investment landscape requiring nuanced analysis beyond surface-level momentum. Each company represents distinct risk-reward profiles that demand careful consideration of valuation, fundamentals, and strategic positioning.

Eicher Motors presents the classic growth-versus-valuation dilemma. Strong operational performance and favorable policy tailwinds support continued expansion, yet elevated valuation multiples suggest limited margin of safety for disappointing execution. Investors must weigh the company's proven franchise strength against stretched pricing metrics.

Mahindra & Mahindra offers the most compelling combination of policy benefits, operational leverage, and reasonable valuation. The company's dual-segment exposure provides multiple growth vectors while maintaining valuation discipline relative to sector peers. Long-term performance metrics validate management's strategic execution capabilities.