Tata Motors, Bharat Forge, Motherson Share Price: India-UK FTA Drives Auto Stocks Higher

Shares of auto and auto component manufacturers were upbeat on May 7 as India and United Kingdom inked the historic multi-billion-pound Free Trade Agreement  (India-UK FTA). This puts an end to three-year long trade negotiations between the two countries. The deal comes amid a time of uncertainty in global trade, with US President Donald Trump's tariffs shaking up trade policies worldwide.

Under the agreement, import tariffs on automobiles will be reduced to 10 per cent from existing 100 per cent. The two countries will also introduce quotas for auto imports, which is expected to make premium UK cars more affordable for Indian buyers.

Nifty Auto Emerges Top Sectoral Gainer

The Nifty Auto index emerged as the top sectoral gainer, surging 1.66 per cent during today's trade. Leading the index was Samvardhana Motherson, which zoomed 5.19 per cent, closely followed by Tata Motors, which gained 5.18 per cent. The rally in Tata Motors' shares was also triggered by the progress in its demerger of commercial vehicle business.

Auto component manufacturer Bharat Forge rallied 4.76 per cent. Tyre-maker MRF too jumped 4.16 per cent, which was also driven after it reported its fourth quarterly earnings.

Similarly, Ashok Leyland, Bosch, Tube Investments of India, Exide Industries, Balkrishna Industries, and TVS Motor Company ended the day in green with gains between 0.4 per cent to 2.5 per cent. Index heavyweights Mahindra & Mahindra and Maruti Suzuki India also closed in green.

Bajaj Auto, Hero MotoCorp and Eicher Motors were the only stocks within the index which settled in the negative territory.

Tata Motors Demerger

Shareholders of Tata Motors gave a consensus nod to demerge the company's commercial vehicle business into two separately-listed entities.

The proposal to demerge the commercial vehicle business received 99.99 per cent of the votes polled in favour, the company said in its exchange filing.

Shareholders of Tata Motors will receive one share of the demerged entity for every share of Tata Motors they own.

MRF Q4 Results

MRF, in Q4, reported a growth of 33 per cent year-on-year (YoY) in its consolidated net profit to Rs 492.7 crore, up from Rs 370.5 crore in the year-ago quarter. Revenue from operations grew 11.4 per cent YoY to Rs 7,074.8 crore from Rs 6,349.4 crore in the year-ago quarter.

The tyre-maker's management also announced a final dividend of Rs 229 per share, taking the total dividend declared for the full financial year 2024-25 to Rs 235 per share.

India-UK Trade

According to the Trade & Investment Factsheet released by the UK's Department for Business & Trade, in the calendar year 2024, trade between the UK and India was £42.6 billion, an 8.3 per cent growth from 2023. India imported goods and services worth £17.1 billion from the UK in the year, while exports were worth £25.5 billion.

India is the UK's 11th largest trading partner, which accounts for 2.4 per cent of the UK's total global trade.

On the investment front, the UK's foreign direct investment (FDI) in India was £17.4 billion in 2023, making up 0.9 per cent of the total UK outward FDI stock. Meanwhile, India's FDI in the UK stood at £13.1 billion, representing 0.6 per cent of the UK's total inward FDI.