Britannia, Maruti Suzuki, ICICI Bank, Amber, Eternal: THESE Stocks Will Benefit The Most From GST Reforms

Prime Minister Narendra Modi's 15th August announcement of introducing Goods and Services Tax (GST) reforms will give a major boost to consumer spending and will have a ripple effect on a range of sectors, including auto, banks, NBFCs, cement, hotels, etc.

Maruti Suzuki, Tata Motors, HDFC Bank, IDFC First Bank, Britannia, Voltas, Delhivery, Eternal, Swiggy, etc, are likely to be the key beneficiaries of the GST reforms, according to Motilal Oswal Financial Services.

Last week, Prime Minister Narendra Modi announced that the Centre would bring a major GST overhaul to boost consumer spending by Diwali this year. The centre has proposed to reduce the GST slabs to 5% and 18%. The Centre is also proposing to shift most of the items kept in the 28% bracket to the 5% bracket, reported Press Trust of India (PTI), citing sources.

GST Reforms: Which Stocks Will Be The Key Beneficiaries?

GST reduction on items of daily use, like dairy products, edible items, is likely to give an impetus to the FMCG sector. Meanwhile, experts have highlighted that the proposed GST reforms may also benefit the industrial sector and boost economic activities. The overall GST overhaul announced by PM Modi will also boost the Indian stock market sentiment.

The proposal to shift key items from the 28% slab to the 18% slab rate would boost four-wheeler demand, give impetus to consumption and reduce EMI obligation for borrowers for consumer durables. Considering these factors, the proposed GST reforms would benefit auto, bank and NBFC stocks like Maruti Suzuki, Tata Motors, IDFC First Bank, Bajaj Finance, etc.

Sector	Key Stocks
Autos	Maruti, Tata Motors, Ashok Leyland
Banks	ICICI Bank, HDFC Bank, IDFC First Bank
NBFCs	Bajaj Finance
Cement	Ultratech, JK Cement, HUVR
Consumer Staples	Britannia
Consumer Durable	Voltas, Havell's, Amber
EMS	Havell's, Amber
Hotels	LemonTree, Indian Hotels
Insurance	Niva Bupa, Max Life, HDFC Life, Star Health
Logistics	Delhivery
Quick Commerce	Eternal, Swiggy
Retail	Relaxo, Bata, Campus

Cement, FMCG, EMS, Hotels,

Reduction in GST rates could lead to a 7.5% to 8% lower prices of items in the cement sector, which may impact the construction cost. Since the majority of the items which may be shifted from the 28% bracket to the 18% bracket fall into the consumer durable and fast-moving consumer goods (FMCG) category, the proposed GST reforms may enhance the profitability of companies like Hindustan Unilever, Britannia, Voltas, Havells, etc.

Boost in demand for products and expected surge in volume growth will also boost the profitability of logistics firms like Delhivery. Additionally, boosted consumer demand will lead to a surge in the demand for quick commerce services. Hence quick commerce giants like Swiggy, Eternal, are also likely to benefit from the proposed reforms.

What Are The Proposed GST Reforms?

Under the revised GST slab structure, the government has proposed to keep only two brackets of 5% and 18%, reported news agency Press Trust of India (PTI) on Friday.

Common man items and daily use products like dairy products, grocery items, etc, are likely to be taxed at 5% rate in the revamped GST regime. The government has also announced to keep certain items, including cigarettes, in the special 40% GST. The 40% GST slab will mostly include luxury goods and imported products, reported PTI. GoodReturns couldn't independently verify the development.

The revamped indirect tax structure, ie GST will not include petroleum products. These products are already outside GST regime and will continue to remain outside after the revision, reported PTI citing sources. The government expects that the GST revamp will give consumption a big boost, which will offset revenue loss due to rate rationalisation, according to PTI.

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