GST revamp a growth reform, says Motilal Oswal; M&M, HUL among top bets

According to Motilal Oswal Financial Services, this measure could trigger a positive shift in Indian equities, which have underperformed over the past year

Following up on Prime Minister Narendra Modi’s Independence Day announcement, the Goods and Services Tax (GST) Council, headed by Union Finance Minister Nirmala Sitharaman, on Wednesday, approved a simplified two-tier rate structure, leaving only two slabs - 5 and 18 per cent. The new structure will be implemented on September 22. 

 

According to analysts at domestic brokerage Motilal Oswal Financial Services (MOFSL), this measure could trigger a positive shift in Indian equities, which have underperformed over the past year. With current market valuations around 20.8x—close to the long-term average and projected double-digit profit growth (10 per cent for Nifty, 12 per cent for MOFSL universe), there is room for further upside.  Analysts believe the government is focusing on the ease of doing business and ease of living by bringing several structural reforms in the GST structure and streamlining various processes. 

 

In its note, the brokerage said this is the first big reform measure of the government in the current term, which should support growth and encourage long-term capacity building to drive the economy toward greater self-reliance in a volatile and uncertain global scenario. 

 

The government's firm push to simplify the GST structure should be viewed not merely as a tax reform, but as a broader growth-oriented measure. By streamlining tax rates and easing compliance processes, the aim is to uplift consumption sentiment across the economy, the brokerage said. 

 

Analysts noted that this is part of a wider reform agenda spanning multiple sectors, designed to unlock the economy’s full potential and provide resilience against ongoing global geopolitical uncertainties. 

Key sectors and stocks to benefit

The approved measures are set to benefit a broad range of sectors, with Automobiles, Consumer Durables, Consumer Staples, Cement, Hotels, and Insurance among the key gainers. Retail, Renewables, and Oil & Gas are also expected to see a positive impact. Additionally, Banks, NBFCs, Logistics, Quick Commerce, and EMS could benefit indirectly from improved consumption and higher volumes.

 

In autos, Maruti Suzuki, M&M, and Ashok Leyland are key picks. Consumer-facing names like HUL, Britannia, Varun Beverages, Havells, Voltas, Amber, Metro Brands, and Trent also stand to gain. Cement players Ultratech and JK Cement, and hotel chains like Lemon Tree and Indian Hotels are likely beneficiaries.  Insurance firms Niva Bupa and HDFC Life, while names like Indraprastha Gas, Acme Solar, and Suzlon stand out in the energy space. Swiggy and Delhivery could gain from volume growth, while ICICI Bank, HDFC Bank, Bajaj Finance, and Shriram Finance are expected to gain from improved consumption-driven demand.