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GST Bill: ITC, Ashok Leyland among nine stocks to pinch your portfolio now

GST Bill: ITC, Ashok Leyland among nine stocks to pinch your portfolio now

FM Jaitley and PM Modi must be two happiest men after Rajya Sabha cleared the GST Bill late on Wednesday, but you should not be, if you hold stocks from the sectors staring at losses post GST implementation.

Photo: Reuters Photo: Reuters

Finance Minister Arun Jaitley along with Prime Minister Narendra Modi must be two happiest men after Rajya Sabha cleared the Goods and Services Tax (GST) Bill late on Wednesday, but you should not be, if you hold stocks from the sectors staring at losses post GST implementation.
 
Brokerage Motilal Oswal has identified following nine stocks that may pinch your portfolio now:

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Ashok Leyland:  The pruning of supply chain management and the reduction of logistical bottlenecks may lead to a reduction in commercial vehicle (CV) demand over the medium term; this may adversely impact pure-play CV players like Ashok Leyland.
 
ITC: ITC pays blended weighted average VAT of nearly 24 per cent, while the blended central excise (charged on length of sticks) is levied at nearly 40 per cent. a committee headed by the chief economic adviser Arvind Subramanian proposes inclusion of tobacco in GST (at a rate of  nearly 40 per cent) and continuance of central excise on cigarettes; this may increase consumer-level prices of products and may hurt volumes.


ALSO READ: How Infosys will ensure smooth implementation of GST


 
Titan: The Subramanian committee has recommended a GST rate of 2-6 per cent for precious metals. Jewelry currently attracts 1 per cent VAT and no excise duty. If the committee's recommendations are accepted, Titan could be impacted.
 
Hindustan Media/HT Media/Jagran Prakashan/DB Corp: Print companies are exempted from the levy of service tax on both ad and circulation revenues. However, if print ad/circulation income comes under the tax ambit, print companies will be adversely impacted. The impact would be marginally cushioned by input credits toward VAT charged on newsprint.
 
Currently, print companies pay 4-5 per cent as VAT on newsprint cost (nearly 30 per cent of revenue). We believe the ability of the print industry to pass on the tax burden to readers is limited in an era where print is increasingly becoming less competitive viz-a-viz digital media.
 
Zee Entertainment/Sun TV:  Broadcasters are likely to be negatively impacted, as service tax rates increase from 14.5 per cent to 18 per cent. We believe large broadcasters like Zee/Sun have enough pricing power to pass on the additional cost and will face limited adverse impact. However, smaller/niche broadcasters will be impacted.

Published on: Aug 04, 2016, 10:27 AM IST
Posted by: Aprajita Sharma, Aug 04, 2016, 10:27 AM IST