Maruti Suzuki Shares Surge Nearly 9% on GST Cut Hopes, Biggest Rally in Five Years

Shares of Maruti Suzuki India Ltd. soared nearly 9% on August 18, 2025, marking their largest single-day gain in five years. The stock closed at around Rs 14,075, up from Rs 12,920 the previous day, driven by strong market optimism around a potential Goods and Services Tax (GST) reduction for small cars across India.

The sharp rally follows reports that the government is considering cutting the GST rate on cars with engine capacity below 1,200 cc from 28% to 18%. This move is expected to significantly boost demand in the passenger vehicle segment, particularly benefiting Maruti Suzuki whose product portfolio largely comprises small, fuel-efficient vehicles in the sub-1,200 cc category.

Market analysts project that if the tax cut is implemented, automobile sales could rise by 15% to 20%, fueling further growth for Maruti Suzuki. Brokerage firms such as Morgan Stanley and Nomura have identified Maruti and Mahindra & Mahindra as key gainers in the passenger vehicle sector in light of the possible GST rationalization. Morgan Stanley highlighted that the automotive sector contributes about 14% to overall GST revenues and historically experiences strong demand upticks following tax reductions.

Additionally, Maruti Suzuki recently became debt free for the first time in five years, strengthening its financial position. The company’s market capitalization also reflected the positive sentiment, climbing to Rs 4.42 lakh crore, ranking it first in the automotive sector.

As of the trading session on August 18, the share price exhibited impressive returns: an 11.7% rise over the past week, an 8.3% increase over three months, and a 10% gain over six months. The stock’s 52-week high stands at Rs 14,125, while its low is Rs 10,725. The current price-to-earnings (PE) ratio is 27.99, with a price-to-book (PB) ratio of 4.23, reflecting robust investor confidence.

Analysts remain overwhelmingly positive on the stock’s prospects, with 36 out of 46 maintaining a “buy” rating, 8 recommending “hold,” and only 2 suggesting “sell.” The expected tax benefits are complemented by Maruti Suzuki’s strategic focus on hybrid vehicles, which may also benefit from proposed GST incentives.

Overall, Maruti Suzuki’s stock surge on August 18 illustrates the market’s strong anticipation of regulatory changes expected to enhance the affordability and demand of small passenger cars in India.