Impact of GST to be mixed on firms; will be beneficial on midcap stocks

MUMBAI: The impact of the goods and services tax ( GST) will be mixed on companies — not much on the biggest listed ones but clearly beneficial on midcap stocks. For instance, only a fourth of the 50 companies on the NSE Nifty will be direct beneficiaries of the landmark tax reform. But down the line, there’s going to be plenty of action.

The biggest bump should come in midcaps, in sectors where the unorganised challenge the organised. Once GST is implemented, unorganised companies will not be able to undercut rivals as tax evasion is set to become difficult. Companies of interest would be the leaders in sectors such as batteries, footwear and plywood, among others.

On the Nifty, the top seven companies in terms of weightage on the index will be largely untouched. However, it should be remembered that GST is expected to act as a booster to economic growth and a rising tide lifts all boats.