Voltas, Blue Star, PG Electroplast shares gain up to 10% on hopes of GST rate rationalisation

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HomeMarket NewsVoltas, Blue Star, PG Electroplast shares gain up to 10% on hopes of GST rate rationalisation

Kotak Institutional Equity said the GST rate rationalisation may provide a ₹2.4 lakh crore boost, benefiting mostly auto stocks and consumer durables.

Voltas, Blue Star, PG Electroplast shares gain up to 10% on hopes of GST rate rationalisation

Shares of consumer durable stocks such as Voltas Ltd., Blue Star Ltd., PG Electroplast Ltd. and Amber Enterprises Ltd., gained up to 10% on Monday, August 18, on the back of hopes that the GST rates on consumer durables would be revised lower.

The Centre's proposed lower GST rates are expected to spur demand for consumer durable categories such as AC and TV, according to analysts who track these companies.

Prime Minister Narendra Modi, during his Independence Day address on Friday, August 15, promised next generation GST reforms ahead of Diwali, which would ease the tax burden for the masses and MSMEs.

Currently, within the electronics segment, ACs and large screen TVs (above 32 inch) fall under the 28% GST slab. Other categories such as smartphones, refrigerators, small screen TV, washing machine, microwave fall under the 18% slab.

Brokerage firm Jefferies sees a good chance that the GST on ACs may reduce to 18% from the current 28%, a view also echoed by CLSA, who expects a similar rationalisation.

CLSA expects this change to strongly influence demand for air conditioners, particularly after recent signs of weakness.

For consumer durables, this will affect both demand growth and profitability.

Kotak Institutional Equity said the GST rate rationalisation may provide a ₹2.4 lakh crore boost, benefiting mostly auto stocks and consumer durables.

On another note, Haier Appliances said any rate rationalisation will give significant boost to demand when AC prices are poised to go up next year due to energy rating, a Mint report stated.

Meanwhile, Blue Star has said that while AC will compete with many other categories, it is still a big positive for sales.

Shares of PG Electroplast, which had tanked as much as 35% in the week before last, are trading with gains of up to 7%.

Shares of Voltas are also trading 7% higher, while those of Amber Enterprises are trading with gains of 6% on Monday.

Also Read: India considering cutting GST on two-wheelers, small cars in reforms push, sources say

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