M&M, Ashok Leyland and MGL Share Price Declines Post Tax Hike in Maharashtra

Market Performance and Share Price Impact

The recent announcement of increased motor tax on compressed natural gas (CNG) vehicles in Maharashtra has significantly affected stock movements in the automotive and gas distribution sectors. On March 11, shares of key companies in electric vehicle (EV) manufacturing, CNG distribution, and light goods vehicle production experienced a decline.

Stock Performance

• Mahindra & Mahindra (M&M): The stock dropped over 3% in early trading, continuing its downward trend since reaching a 52-week high on February 10. Despite this decline, it remains above its 52-week low of ₹1,789, recorded on March 15, 2024.
• Ashok Leyland: Shares declined nearly 3%, extending their six-month loss to approximately 17%.
• Mahanagar Gas (MGL): The stock saw a 1.47% decline, reflecting investor concerns over taxation policies.
• Other Auto Stocks: Maruti Suzuki and Tata Motors also faced marginal losses in early trading.

Maharashtra’s Budget Announcement

During the state Budget presentation, Maharashtra Finance Minister Ajit Pawar introduced key tax hikes affecting the automobile industry:

• CNG Four-Wheelers: Motor vehicle tax increased by 1% (previously ranging from 7% to 9% based on the model and price).
• Luxury Electric Vehicles (EVs): A 6% tax was imposed on EVs priced above ₹30 lakh, expected to generate ₹170 crore in additional revenue.
• Light Goods & Construction Vehicles: A 7% motor tax was introduced for vehicles transporting light goods and construction materials, projected to bring in ₹625 crore in revenue for 2025-26.

Implementation Timeline

The revised taxation policies will come into effect on April 1, marking the start of the new financial year 2025-26

Company Overview

Mahindra & Mahindra (M&M)

Mahindra & Mahindra, a leading automaker in India, recently unveiled two electric SUV models: BE 6 and XEV 9e. The company also manufactures CNG-powered mini trucks.

Ashok Leyland

Ashok Leyland is a major producer of commercial vehicles, including trucks used for transportation and construction of light goods.

Mahanagar Gas (MGL)

MGL is a key supplier of CNG and PNG, with its operations primarily focused in Maharashtra.

Industry Impact and Summary

Maharashtra ranks second in India for EV registrations between 2019 and 2024, following Uttar Pradesh. The state has recorded 4.39 lakh EV registrations out of a total of 36.4 lakh across the country.

The proposed tax changes are expected to financially impact both manufacturers and consumers in the automotive sector. With several automakers headquartered in Maharashtra, the new taxation policies may influence future investment and operational decisions within the state's automotive industry.