GST reforms: MOFSL has come out with a note on proposed changes to GST, which it believes can benefit at least two dozen stocks. Among them are Hindustan Unilever, Britannia Industries, Maruti Suzuki India, Ashok Leyland, Ultratech Cement, Voltas and Amber Enterprises India, among others.
Delhivery, Lemontree, Swiggy, HDFC Bank and Bajaj Finance are a few other stocks that it believes could benefit from the proposed GST announcements.
The GST reforms will involve rationalizing rates into two slabs against the existing four slabs for most items, barring sin goods. Procedural simplification and streamlining measures are proposed to enhance ease of business and encourage wider compliance.
Maruti Suzuki India and Ashok Leyland are seen benefitting from a likely reduction in GST rate from 28 per cent to 18 per cent.
For consumer staples, MOFSL said: “Majority of items are at the 18 per cent slab, though staple companies generally benefit since several raw materials are at 12 per cent rate, resulting in lower input GST; the segment benefits as it is a core revival area for the government,” MOFSL said.
Amber Enterprises, a key supplier to AC companies, will benefit if RAC’s GST rate is lowered to 18 per cent from 28 per cent, the domestic brokerage said.
Niva Bupa, Max Life, HDFC Life may gain as senior citizens’ policies currently attract 18 per cent, but there is a possibility that this may be reduced to 5 per cent or completely exempted. In such an eventuality, health insurers and term life-heavy insurers can benefit, MOFSL said.
Eternal and Swiggy may benefit from higher consumption demand, a substantial part of which will be fulfilled through the quick commerce channel. In the retail, footwear players such Relaxo, Bata India and Campus are seen gaining. The makers of mass market products can benefit from a shift to lower slabs, as the tax slab for less than Rs 1,000 footwear had earlier increased to 18 per cent from 5 per cent and a significant demand had shifted to unorganized market. With the latest
announcements, the tax arbitrage of the unorganized segment will shrink, benefitting organized players, MOFSL said.
Bajaj Finance may gain, said MOFSL, as EMI obligation for consumer durables should reduce, benefitting NBFC lending in this segment. Voltas and Havells are also seen gaining from a likely reduced GST rate.
The central government has proposed that most goods be subsumed in the 5 per cent and 18 per cent. Almost 99 per cent of the goods currently in the 12 per cent slab
(standard goods) are expected to be transitioned to the 5 per cent slab, which should lower retail prices by 4-5 per cent, aiding household budgets.
“90 per cent of the goods in the 28 per cent slab will likely be moved to 18 per cent. Here too, households can expect sizable savings, owing to some higher-ticket consumption items bracketed in the 28 per cent tier. The proposals and finer details are likely to be approved by the GST Council in early 3QFY26. The Finance Ministry has indicated Rs 50,000 crore of tax revenue impact, which appears manageable,” MOFSL said.