Brokerage firm Motilal Oswal Financial Services believes the GST reforms announced on Wednesday, September 3, will give a significant boost to consumer sentiment and revive slowing consumption, which in turn will support India’s economic growth at a time when global uncertainties pose a key headwind.
The brokerage firm highlighted that the government is focused on lifting and stimulating the domestic economy. The latest announcements on GST, once implemented, will be the government’s first big structural reform in the current term, which will also kickstart a cycle of positive uptrends for the Indian equity market.
“The current valuations at nearly 20.8 times versus the long-period average of 20.7 times are reasonable and have room to expand given our estimates of double-digit PAT growth of 10 per cent for Nifty 50,” Motilal Oswal said.
The brokerage firm underscored that the reforms are likely to yield economy-wide benefits and favourably impact several sectors.
The brokerage firm listed the following key sectoral and stock beneficiaries of the reforms.
Key stock beneficiaries
Motilal Oswal believes the domestic-focused stocks will likely benefit from the GST reforms. According to the brokerage firm, some key stocks and sector beneficiaries are:
Automotives
Maruti Suzuki, Hyundai Motor India, Mahindra and Mahindra, Escorts, Bajaj Auto, Ashok Leyland, Hero MotoCorp, VECV, Motherson Sumi Wiring India, Happy Forgings, Endurance, and Bosch.
Banks
ICICI Bank, HDFC Bank, and IDFC First Bank.
The brokerage firm expects sector benefits from second-order flow through as consumption and economic activities pick up.
“Household confidence and demand for debt should also move up, and credit growth should move into double digits in the second half of FY26. Direct benefits for consumer-heavy lenders and credit card players,” said Motilal.
Consumer durables
Havells, Voltas, and Blue Star.
Electronic manufacturing services (EMS)
Amber Enterprises India, as the company is a key supplier to AC companies.
Consumer staples
ITC will be a key beneficiary as the GST rate will now apply to MRP, while earlier it applied to transaction value.
“The current total taxes are nearly 50-55 per cent of MRP. If there is no additional duty beyond the revised GST rate, it is positive for the space, but clarity is awaited,” said Motilal.
Britannia, Nestle, Dabur, Varun Beverages, Marico, Hindustan Unilever, and Emami.
Fertilisers
Coromandel International, as GST on raw materials have been cut from 18% to 5%.
Hotels
Lemon Tree, and Indian Hotels.
Health and life insurance
Niva Bupa, Star Health, ICICI Lombard, HDFC Life, SBI Life, ICICI Pru Life, Max Fin, and LIC.
Logistics
Motilal said Delhivery could be a key beneficiary due to the expected volume increase in categories like consumer durables and electronics, which form a large part of its volumes.
Man-made fibres
Grasim Industries
NBFCs
Bajaj Finance and HDB Financial.
Vehicle financiers
Mahindra and Mahindra Financial Services, Cholamandalam Investment and Finance, and Shriram Finance.
Oil and gas
Indraprastha Gas, Mahanagar Gas, and Gujarat Gas.
Quick commerce
Motilal said Eternal and Swiggy benefit from higher consumption demand, a good part of which will be fulfilled through the Q-commerce channel.
Retail
Westside (Trent), Pantaloons (Aditya Birla Fashion and Retail), Aditya Birla Lifestyle Brands, Go Fashion, Relaxo, Bata, Campus, Metro Brands, Reliance Retail, Electronics Mart India, Aditya Vision, and DMart.
Renewables
Acme Solar, JSW Energy, Suzlon, Waaree Energies, and Premier Energy.
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Disclaimer: This story is for educational purposes only. The views and recommendations expressed are those of the broking firm, not Mint. We advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and circumstances may vary.
