Skip to main content

Logistics stocks up on GST clearance hope

By
Shares of companies in the logistics sector gained ground on Thursday on hope that the government will be able to secure clearance for a revised goods and services tax (GST) Bill in the Rajya Sabha next week.
Snowman Logistics, GATI, Allcargo Logistics, VRL Logistics, Patel Integrated and Transport Corporation of India are some stocks in this segment that rallied, by 3.8-7.2 per cent. In comparison, the benchmark S&P BSE Sensex and Nifty50 indices ended the day at 28,209 and 8,666, up around 0.6 per cent each.
According to reports, the empowered committee of the finance ministers of states on Tuesday agreed that the revenue-neutral rate (RNR) would not be specified in the GST Constitution amendment Bill, raising hopes that it would be passed by the Rajya Sabha next week.
While the short-term macro economic implications of GST should be mixed, longer-term implementation should lift growth and enable greater government fiscal consolidation, analysts say.
“GST will be clearly positive, as gains from a more efficient tax system, greater price competitiveness (reduced costs) and the removal of interstate tax barriers should boost growth via higher exports and investments, structurally lower inflation, and raise government (central + state) tax revenues,” say Ravi Adukia and Saion Mukherjee of Nomura in a recent report.
Indranil Pan, chief economist at IDFC Bank also suggests that the GST will eliminate multiple levies and state boundaries which should lower cost of doing business. Moreover, the current inefficient supply chain due to higher logistics costs will see dramatic improvement in turnaround times and also lead to lower transportation costs, he says.
From sector perspectives, analysts at Nomura suggest that the GST will be generally positive for consumption-related sectors (auto, consumer durables, FMCG etc.).
Logistics stocks rally as govt paves way for GST bill clearance “Logistics should benefit from the removal of inefficiencies in interstate taxation and check posts. The services sector, however, should be impacted negatively due to the higher tax burden,” the Nomura report says.
Though most analysts expect the benefits of implementation of the GST bill to accrue over the long-term, they remain cautious on the related stocks in this space given the run-up in most counters over the past few weeks.
“Logistic stocks will once again run up on the development.  Most stocks in this space are over-priced and the Bill, even if it is passed, is not likely to bring profits immediately to these companies. We advise caution,” said G Chokkalingam, managing director, Equinomics Research & Advisory.
Business Standard New Delhi, 29th July 2016

Comments

Post a Comment

Popular posts from this blog

RBI deputy governor cautions fintech platform lenders on privacy concerns during loan recovery

By
  India's digital lending infrastructure has made the loan sanctioning system online. Yet, loan recovery still needs a “feet on the street” approach, Swaminathan J, deputy governor of the Reserve Bank of India, said at a media event on Tuesday, September 2, according to news agency ANI.According to the ANI report, the deputy governor flagged that fintech operators in the digital lending segment are giving out loans to customers with poor credit profiles and later using aggressive recovery tactics.“While loan sanctioning and disbursement have become increasingly digital, effective collection and recovery still require a 'feet on the street' and empathetic approach. Many fintech platforms operate on a business model that involves extending small-value loans to customers often with poor credit profiles,” Swaminathan J said.   Fintech platforms' business models The central bank deputy governor highlighted that many fintech platforms' business models involve providing sm
Post a Comment
Read more

Credit card spending growth declines on RBI gaze, stress build-up

By
  Credit card spends have further slowed down to 16.6 per cent in the current financial year (FY25), following the Reserve Bank of India’s tightening of unsecured lending norms and rising delinquencies, and increased stress in the portfolio.Typically, during the festival season (September–December), credit card spends peak as several credit card-issuing banks offer discounts and cashbacks on e-commerce and other platforms. This is a reversal of trend in the past three financial years stretching to FY21 due to RBI’s restrictions.In the previous financial year (FY24), credit card spends rose by 27.8 per cent, but were low compared to FY23 which surged by 47.5 per cent. In FY22, the spending increased 54.1 per cent, according to data compiled by Macquarie Research.ICICI Bank recorded 4.4 per cent gross credit losses in its FY24 credit card portfolio as against 3.2 per cent year-on-year. SBI Cards’ credit losses in the segment stood at 7.4 per cent in FY24 and 6.2 per cent in FY23, the rep
Post a Comment
Read more

India can't rely on wealthy to drive growth: Ex-RBI Dy Guv Viral Acharya

By
  India can’t rely on wealthy individuals to drive growth and expect the overall economy to improve, Viral Acharya, former deputy governor of the Reserve Bank of India (RBI) said on Monday.Acharya, who is the C V Starr Professor of Economics in the Department of Finance at New York University’s Stern School of Business (NYU-Stern), said after the Covid-19 pandemic, rural consumption and investments have weakened.We can’t be pumping our growth through the rich and expect that the economy as a whole will do better,” he said while speaking at an event organised by Elara Capital here.f there has to be a trickle-down, it should have actually happened by now,” Acharya said, adding that when the rich keep getting wealthier and wealthier, they have a savings problem.   “The bank account keeps getting bigger, hence they look for financial assets to invest in. India is closed, so our money can't go outside India that easily. So, it has to chase the limited financial assets in the country and
Post a Comment
Read more