Maruti Suzuki stock rises most in five years, closes 9% higher

Maruti Suzuki India shares clocked their largest single-day gain in nearly five years, surging up to 9% on August 18, 2025. Later, Maruti Suzuki India shares closed 9% higher at Rs 14,075 against the previous close of Rs 12,920 on BSE. Market cap of the firm rose to Rs 4.42 lakh crore. The rally follows expectations of a potential GST rate rationalisation, which could significantly benefit the company. Reports indicate that the GST rate on cars, currently at 28%, might be reduced to 18% for vehicles below 1,200 cc. This adjustment is expected to boost demand substantially, with projections indicating a 15% to 20% increase in automobile sales if the tax cut is enacted.

Brokerage firms like Morgan Stanley and Nomura identify Maruti and M&M as major beneficiaries within the passenger vehicle segment should the GST rate change. Morgan Stanley notes that the automotive sector contributes 14% to the overall GST collection and has historically responded positively to tax cuts, as evidenced by the 20% increase in demand following the 2008 tax reductions.

The company's product lineup, heavily focused on vehicles in the sub-1,200 cc category, positions it well to leverage any GST reductions. Analysts argue that alongside the potential for increased demand, Maruti's strategic mix of small and hybrid vehicles aligns well with proposed tax incentives. As such, the stock's performance remains robust, supported by broad market confidence and favourable conditions in the automotive tax landscape.