The GST windfall

Analysts think mid-caps and small-caps in retail, logistics, plywood and plastic sectors are well-placed to benefit from the change in regulation

Soumik Kar

On July 1, last year, the complicated web of indirect taxes was replaced by the Good and Services Tax (GST). The introduction of new tax regime was a contributing factor to positive investor sentiment as organised businesses including listed companies were expected to gain from GST. Stock prices soared, factoring in the effects of the new tax regulation.

Abhimanyu Sofat Head, research, IIFL Securities

One year on, while few small- and mid-caps are showing early signs of benefiting from the most significant tax reform since independence, some are still awaiting the gains of the new tax regime. As the disruption caused by the reform recedes, small benefits are becoming visible, according to analysts. “The shift towards the organised sector is already visible in GST-themed stocks. Stock prices will rebound once the growth comes back,” says Abhimanyu Sofat, head, research, IIFL Securities. 

Pointing out to demonetisation and implementation of GST and e-way bills, Mahesh Patil, co-chief investment officer, Aditya Birla Sun Life Mutual Fund says that the organised sector will benefit from these reforms. Looking to grab the opportunity provided by the implementation of GST, several AMCs launched a fund last year comprising stocks that will benefit from the new tax regime over the next three years. “Companies who are able to manage the uncertainty in the interim, without losing sight of the broader opportunity, will eventually succeed. The current market correction provides good opportunity to buy mid- and small-cap stocks,” says Patil.

Mahesh Patil Co-CIO, Aditya Birla Sun Life MFGetting more organised

During the GST rollout, the shift towards the organised sector was projected as one of th


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