Why These Stocks Could Be Big Gainers If GST Sails Through?

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One thing is certain about the Goods and Services Tax (GST), is that it will sail through at some point of time in the future. Most regional parties want the Bill passed, and so does the government.

It is just a matter of time, before the GST Bill is passed by the Rajya Sabha. When that happens we might see a few companies improving business prospects and here are the likely gainers from the GST.

Why These Stocks Could Be Big Gainers If GST Sails Through?
We are not recommending to buy these stocks, but, are merely stating that these stocks could be beneficiaries. In terms of fundamentals, most of these stocks look over priced already.

VRL Logistics

What happens when there is a simplistic tax regime is that transporters like VRL, which have to be inspected at ewvery check-post and pay tax accordingly, gain through lower checks and lower transit time. This means optimizing on delivery and improved efficiency.

Also, a logistic players like VRL would be increasingly sought to manage hub-and-spoke supply chains.

On the fundamentals front, the company can report an improved EPS of Rs 15 for 2016-17, which translates into a p/e of 20 times. Having said that the stock is not exactly cheap. If you want to make money, you would have to be a long term holder in the stock.

Century Plyboards

The unorganised sector that are competitors for Century Plywood would come under the tax ambit after GST. This would benefit Century Plyboards. It would help improve volumes and margins at the company.

Again, this is not a stock that is exactly cheap. The company reported losses for the quarter ending Dec 31, 2015.

Inox Leisure

Inox Leisure is a company that is into the mutiplexes business. This is one business that is hit by very high taxes, due to entertainment tax being as high as 50 per cent in certain states.

With the implementation of the GST, it is likely that there would be a lower incidence of tax and hence better margins.

The management has reiterated at aggressive growth plans for over the next two to three years and plans to reach 645 screens over the same time frame.

The balance sheet looks healthy as well. Again, like most beneficiaries of the GST, the stock does not look cheap at the current market price.

At the moment the GST Bill has to pass through the Rajya Sabha and than also approved by state legislative assemblies. The Bill has the potential to boost GDP and this time many analysts are hopeful that it would sail through.

GoodReturns.in

Read more about: gst, inox leisure, century
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