Sector Updates

Event Update: GST Reform 2.0

India’s auto sales in August 2025 reflected a broadly mixed trend across segments. The industry’s domestic retail performance softened as consumers deferred purchases in anticipation of potential GST cuts

OEM wholesale sales volume for August 2025 came in healthy with 2W & tractor segments outperforming its peers. Notably, exports continue to stage a healthy growth on YoY basis for most of the OEMs. CV space reported healthy volume prints for the month of August 2025 with green shoots of recovery visible in the LCV segment. Maruti performed better than the peers in PV segment while Royal Enfield (Eicher motors) lead the growth charge in 2W domain. M&M continues to decisively dominate the...

We prefer TVS Motors, Hero Motocorp, and Bajaj Auto in 2Ws (Eicher seems fully valued at CMP); M&M (non-coverage) as a play in the PV/LCV/tractor segment, followed by Maruti in PVs. We also like Ashok Leyland in the CV space, followed by a close watch on Eicher (VECV) for any market share gains.

Total sales volumes remained largely flat at 1,80,683 units (-0.6% YoY, +0.1% MoM), as domestic weakness continued to weigh on overall growth, partly offset by resilient exports and steady LCV demand.

Banking sector (non-food) credit growth remains muted in July'25 at ~0.1% MoM (9.9% YoY) vs ~1.1% MoM (9.3% YoY) in June'25. The latest sectoral deployment data showed that credit growth is muted in agri, industry and services sectors, Agri loans (yoy) growth was 7.3% in July'25 vs 6.8% in June'25. Loans to industries yoy growth increased to 6.1% in July'25 vs 5.5% in June'25. Services sector growth increased to 11.1% vs 9.0% YoY in June'25. Growth in loans to NBFCs moderated to 2.6% YoY in July'25 vs 2.6% YoY in June'25. However, loan to retail segment slightly moderated to ~11.4% YoY in July'25 vs 12.1% in June'25. Unsecured loan portfolio...

India’s real GDP growth surprised positively as it accelerated to 7.8% YoY in 1QFY26 (highest in five quarters), up from 6.5% in 1QFY25 and well above our expectations of 6.5% (Exhibit 1).

The proposed GST rate rationalization has created uncertainty among consumers, leading to the postponement of purchase decisions, most noticeably in the PV segment, and to a lesser extent in 2Ws.

With a strong start to FY26, the Indian hospitality industry is well poised to continue its growth momentum, with healthy RevPAR growth in FY26.

Value fashion continues to outperform the premium and branded apparel retailers, underpinned by structural tailwinds.