Dalal Street bets on GST consensus, bill passage hopes fire up stocks

MUMBAI: Midcap stocks such as Page Industries, Havells, TTK Prestige and Kajaria Ceramics are on the radar as investors are betting they will benefit from the Goods and Services Tax ( GST) bill, which is expected to be passed in the winter session of the Parliament starting this week.

Analysts said the biggest beneficiaries of the new tax law will be companies that operate in markets where the largest shares are held by unorganised players, which will lose their competitive advantage once they are brought under the goods and services tax net.

"Shares that would be beneficiaries from passage of the GST bill are likely to outpace markets as traders will boost these stocks, but we would advise investors to buy on correction with a long-term horizon," said Kunj Bansal, ED and chief investment officer at Centrum Wealth Management. "Investors should wait for more clarity about the GST bill as currently there has been a lot of opposition in Parliament."

The shares of some companies have already rallied. Godfrey Phillips gained 41 per cent over the past month, Allcargo Logistics rose 21 per cent, Havells India advanced about 15 per cent, while La Opala surged almost 8 per cent during this period. All these stocks outperformed the BSE 500 Index, which gained 3.75 per cent over the past month.

"Stocks of logistics, tobacco, consumer durables, electronics and others are expected to perform well over the next one month," said Vinod Nair, head of fundamental research at Geojit BNP Paribas Financial Services. "Market expectations are very high regarding the passage of the GST bill in Parliament as the government is trying to reach out to different opposition parties for a consensus."

The BJP’s loss in the recent Bihar assembly elections is seen as a wake-up call for the government, which plans to implement the GST from April 1. The deadline may be missed if the bill isn’t passed by the Parliament in the winter session starting November 26.

Exide Industries, Amara Raja Batteries, Jubilant FoodWorks, Asian Paints, Pidilite Industries, Britannia Industries, ITC and Marico are expected to benefit from the new tax, which will replace a bunch of taxes imposed by states. Others including PVR Cinemas and Dish TV may gain from a lower GST rate.

Analysts said GST is positive for the economy because it streamlines taxes and there could be substantial savings for the manufacturing sector.