ET points out that the news that the Union Cabinet has cleared the Goods & Services Tax (GST) Amendment Bill has resulted in the 400 points surge in the BSE Sensex.
The bill is likely to be tabled in current session of Parliament. Once passed, the GST is expected to transform India’s indirect taxation system.
GST will simplify the taxation structure, which will encourage third-party logistics in India, reduce compliance cost, reduce number of warehouses and allow tax credit across the supply chain, making it more efficient, Kotak Securities was quoted as saying.
According to Kotak, companies like Exide Industries, Amara Raja Batteries, Jubilant FoodWorks, Asian Paints, Pidilite Industries, Britannia Industries, ITC and Marico are expected to benefit from the bill.
According to Sharekhan, Gateway Distriparks and Concor will be major beneficiaries. It points out that over the long term, the outlook of the rail freight business is extremely favourable given the investments in dedicated freight corridors. It is also optimistic on the secular growth story of improving macro-economic environment having a positive effect on the logistic companies like Concor and GDL.
Another major beneficiary is Century Plyboards India Ltd, a leading player in the fast growing plywood and laminate segment, with an overall share of 25% of the organised plywood market. For procuring wood, the plywood industry doesn’t pay any excise duty or VAT. Therefore, there is no CENVAT credit available to the plywood manufacturers. As a result, the scope for savings is huge if the excise duty is evaded (that is why the plywood segment has more unorganised players, who form 70% of the segment). However, once the GST comes into force, the tax advantage currently enjoyed by the unorganised players would diminish sharply and the market share of the organised players would surge.
ET has collated a list of stocks recommended by various brokerage firms which are likely to benefit most post implementation of GST: