Shares of Eicher Motors Ltd climbed 3.66% to ₹5,975 in early trade on August 18, tracking sector-wide gains after reports suggested that the government is weighing a GST cut on entry-level two-wheelers, compact cars, and hybrid vehicles. The stock touched an intraday high of ₹5,995, buoyed by renewed optimism around tax reforms that could reduce costs for consumers and boost sales volumes for automakers.
The move comes in the backdrop of the government’s push towards a simplified two-slab GST regime, with Prime Minister Narendra Modi hinting at a “Diwali gift” in the form of rationalisation. Under the reported plan, two-wheelers under 350cc and smaller passenger vehicles could see GST cut to 18%, down from the current 28–31% range (including cess). Luxury vehicles and SUVs are expected to remain at the higher 40% slab. Analysts believe such a rejig would enhance affordability, stimulate consumption, and drive festive season demand.
For Eicher Motors, which manufactures the iconic Royal Enfield motorcycles, a cut in GST on sub-350cc models such as the Classic 350 and Hunter could prove particularly positive, given their strong contribution to volumes. Analysts also point out that lower taxation could support penetration in rural and semi-urban markets, where price sensitivity remains high. In the premium motorcycle segment, sustained demand momentum combined with lower tax outgo could further cement Eicher’s market dominance.
Brokerages have flagged Eicher Motors as a key beneficiary in the two-wheeler space if the tax cut goes through. Alongside Hero MotoCorp and TVS Motor, the company is expected to gain the most in terms of incremental demand and market share, with the reforms potentially driving a structural uptick in volume growth.
