QSR stocks rally: Domino's, KFC parent firms soar up to 7% on GST relief

Jubilant FoodWorks' stock rose 4.6 per cent, while Devyani International and Sapphire Foods India rose 4.2 per cent and 7.6 per cent, respectively

Shares of Indian quick commerce companies were trading higher on Thursday after the Goods and Services Tax (GST) Council slashed the indirect tax on bread and paneer-based items to nil.  

 

Jubilant FoodWorks' stock rallied as much as 4.6  per cent, while shares of Devyani International and Sapphire Foods India rose 4.2 per cent and 7.6 per cent, respectively. 

 

As of 12:50 PM, Jubilant FoodWorks was up 3.5 per cent, while Devyani International and Sapphire Foods were trading higher by 2.6 per cent and 1 per cent, compared to a 0.41 per cent advance in the benchmark Nifty50 index  

 

 

QSR firms see GST relief

The GST Council, chaired by Union Finance Minister Nirmala Sitharaman, reached a consensus on Wednesday to adopt a simplified two-tier rate structure. The new rates will take effect from September 22, the first day of Navratri. A special rate of 40 per cent will apply to all luxury and tobacco-related products. 

 

The GST payable on pizza bread, Paratha, parotta and other Indian breads were cut to 'Nil' from higher taxes earlier, thereby reducing the bills payable by the consumer. Earlier, pizza bread was charged 5 per cent GST, while paratha and bread were charged 18 per cent. This reduction in prices could effectively drive up sales for QSR companies like Jubilant Foodworks and Devyani International. 

 

Further, the GST for chocolates and other food preparations containing cocoa were brought down from 18 per cent to 5 per cent. However, any carbonated beverages of fruit drink or carbonated beverages with fruit juice will not attract an indirect tax of 40 per cent, up from 28 per cent earlier. 

 

Motilal Oswal said the approved GST measures will benefit key sectors, including autos, consumer durables, staples, cement, hotels, insurance, retail, renewables, oil & gas, banks, NBFCs, logistics, quick commerce and EMS, with an economy-wide positive impact.

 

Packaged food products such as branded namkeens, bhujia, instant noodles, fruit juices and ayurvedic items have seen a 7 per cent reduction in GST to 5 per cent, which was largely expected, JM Financial said. Bikaji, Gopal Snacks, Nestle and Dabur stand to benefit given their strong presence in these categories. 

 

The cut in tax rates on packaged water, chocolates, instant coffee (which came as a surprise) and biscuits from 18 per cent to 5 per cent is expected to result in significant price reductions for consumers, JM Financial said. However, it noted that the need to pass on tax cut benefits through lower prices, while also managing price hikes to offset rising input costs, could complicate near-term pricing strategies.