GST cut fuels fresh optimism as auto sector reports up to 400% profits, stocks deliver up to 700% in 5 years

India’s automobile sector has performed strongly in the markets over the past five years, with companies not only delivering sharp improvements in profitability but also rewarding investors with multi-bagger stock returns. Data from ACE Equity shows that the combined profit after tax of 20 companies in BSE auto index has jumped 415% to Rs 95,797 crore in FY25 from Rs 18,610 crore in FY20. While the top line has recorded 83% growth in five years with revenues reaching Rs 13.22 lakh crore. Besides auto stocks delivered up to 700% return in this duration.

Profit Growth Leaders

On the operating front, Ashok Leyland stood out with a massive 636% jump in profit, rising from Rs 460 crore in FY20 to Rs 3,383 crore in FY25, as revenues more-than-doubled to Rs 49,417 crore. Similarly, UNO Minda reported 483% profit growth, with PAT soaring to Rs 1,021 crore on revenues of Rs 16,808 crore. Mahindra & Mahindra delivered 419% profit growth, with PAT rising from Rs 2,713 crore in FY20 to Rs 14,073 crore in FY25, while revenues more-than-doubled to Rs 1,65,069 crore.

Among auto ancillaries, Samvardhana Motherson International’s profits grew 344% to Rs 4,146 crore, while Bosch posted 244% growth to Rs 2,013 crore. Tube Investments of India saw a 237% rise in profit alongside a threefold jump in revenue, underlining the strong performance of component makers.

Two-wheeler companies also saw robust gains. TVS Motor Company reported a 263% profit surge, with PAT at Rs 2,350 crore in FY25, while Eicher Motors, maker of Royal Enfield, delivered 159% profit growth to Rs 4,734 crore. Market leader Maruti Suzuki India profits more than doubled to Rs 14,500 crore, while Hyundai Motor India also saw a 136% increase in PAT.

Tata Motors managed a sharp turnaround, as it swung from a loss of Rs 10,975 crore in FY20 to a profit of Rs 23,278 crore in FY25.

Stock Market Winners

The sharp operating turnaround was mirrored in the equity markets, where auto stocks delivered stellar returns. TVS Motor Company emerged as the sector’s best performer, giving investors a massive 727% return over five years. Its stock, now at Rs 3,591, with a market capitalisation of Rs 1.71 lakh crore.

Close behind, UNO Minda surged 700%, taking its market value to Rs 75,506 crore, while Mahindra & Mahindra delivered 508% returns, now valued at Rs 4.60 lakh crore. Tata Motors rewarded investors with a 406% return, supported by its earnings turnaround and global strategy.

Other wealth creators include Tube Investments of India (380% returns), Apollo Tyres (324%), and Ashok Leyland (306%). Large caps like Eicher Motors (215%) and Bosch (224%) also remained steady outperformers. While, Maruti Suzuki India gave 111% return, with the highest market capitalisation at Rs 4.80 lakh crore in the auto sector. Samvardhana Motherson International posted 98% growth, with its Rs 1.04 lakh crore market valuation.

Adding a fresh dimension to this growth outlook are the recent tax reforms. “The recent GST reforms, effective from September 22, 2025, come as an unexpected positive surprise for the markets, offering a much-needed hope amid ongoing global conflicts, challenging the import tariffs and overall consumption slowdowns,” says Divam Sharma, Co-Founder and Fund Manager at Green Portfolio PMS.

He notes that the move, which reduces GST on automobiles from 28% to 18%, could be a game-changer for financing-led demand. “For the automobile sector, the largest beneficiaries are vehicle loan-oriented NBFCs which will ride on the rate change for automobiles,” he adds. According to him, lenders focused on vehicle loans, which were under pressure from weak credit growth and slowing sales, may now see a relief rally as consumer appetite for auto financing revives.

At the same time, Sharma tempers the optimism by stressing that the market’s initial jump is more sentiment-driven than a reflection of immediate fundamental improvements. “Overall, while the auto sector offers quick, tangible wins for short-term plays, the broader revival in economic sentiment will take time,” he cautions.