GST Rate Cut Likely: Stocks that could be the potential beneficiaries of new reforms

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HomeMarket NewsGST Rate Cut Likely: Stocks that could be the potential beneficiaries of new reforms

For the Nifty, Bernstein highlighted that despite the near-term economic weakness and tariff uncertainty, it expect a high-single-digit return for the rest of the year.

 Stocks that could be the potential beneficiaries of new reforms

Prime Minister Narendra Modi has promised next generational GST reforms by Diwali, which will bring down the tax burden on consumers as well as MSMEs. Analysts have highlighted stocks that could count as potential beneficiaries of such announcements.


Jefferies

Brokerage firm Jefferies believes that the GST rate rationalisation could take place in the fourth quarter of the current calendar year.

It sees a good chance that GST on Cement, Two-Wheelers and Air Conditioners may go down to 18% from 28% earlier.

Certain other potential reductions may include insurance, hybrid cars, processed foods, garments, footwear, etc., according to Jefferies, who also does not rule out a potential rate reduction on passenger cars.

Citi

Citi expects potential beneficiaries to include medicines, processed foods and non-alcoholic beverages, some apparels, white goods, insurance, and cement companies.

The total household-oriented policy stimulus, which includes the GST revision, income tax cuts and lending rate cuts in FY26 could be between 0.7% and 0.8% of GDP.

All of these measures, according to Citi, should boost festive demand and the FY27 earnings outlook, something that is keenly awaited.

Goldman Sachs

Within the consumer segment, Goldman Sachs has highlighted products, which are at the 12% slab and could benefit significantly. Here's a look at such names:


Trent: Apparel priced above ₹1,000, which is 1/3rd of the company's overall sales, mostly via Zudio.
Page Industries: Some outerwear priced above ₹1,000
Bata: Footwear priced below ₹1,000
Metro Brands: Good for Walkway store acceleration planned by the company, which has price below ₹1,000
Stocks like Nestle, Dabur, and Titan could also be potential beneficiaries.

CLSA

CLSA believes that materials, consumer durables, items like cement and ACs, which currently attract a 28% GST rate, could potentially be lowered to 18%.

"We expect this change to strongly influence demand for air conditioners, particularly after recent signs of weakness," CLSA wroe in its note.

The brokerage expects Cement and AC, which contribute to nearly 3.5% of the total GST collection, and the cement impact could be potentially offset by the reduced input tax credit.

Bernstein

Bernstein expects the markets to cheer this fiscal push, although a part of this flow could emerge from the truncated capex.

For the Nifty, the brokerage highlighted that despite the near-term economic weakness and tariff uncertainty, it expect a high-single-digit return for the rest of the year.

For sectors, Bernstein continues to prefer consumer-oriented sectors over industrials. Bernstein had moved its weightage on staples to "overweight" last month and had also upgraded the durables space earlier this year.

"This also means some money absorbed from the capex front, where we have turned equal-weight on utilities and remain underweight on Industrials," the note said.

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