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

Household debt up, but India still lags emerging-market economies: RBI

By
  Although household debt in India is rising, driven by increased borrowing from the financial sector, it remains lower than in other emerging-market economies (EMEs), the Reserve Bank of India (RBI) said in its Financial Stability Report. It added that non-housing retail loans, largely taken for consumption, accounted for 55 per cent of total household debt.As of December 2024, India’s household debt-to-gross domestic product ratio stood at 41.9 per cent. “...Non-housing retail loans, which are mostly used for consumption purposes, formed 54.9 per cent of total household debt as of March 2025 and 25.7 per cent of disposable income as of March 2024. Moreover, the share of these loans has been growing consistently over the years, and their growth has outpaced that of both housing loans and agriculture and business loans,” the RBI said in its report.Housing loans, by contrast, made up 29 per cent of household debt, and their growth has remained steady. However, disaggregated data sho...
Post a Comment
Read more

External spillovers likely to hit India's financial system: RBI report

By
  While India’s growth remains insulated from global headwinds mainly due to buoyant domestic demand, the domestic financial system could, however, be impacted by external spillovers, the Reserve Bank of India (RBI) said in its half yearly Financial Stability Report published on Monday.Furthermore, the rising global trade disputes and intensifying geopolitical hostilities could negatively impact the domestic growth outlook and reduce the demand for bank credit, which has decelerated sharply. “Moreover, it could also lead to increased risk aversion among investors and further corrections in domestic equity markets, which despite the recent correction, remain at the high end of their historical range,” the report said.It noted that there is some build-up of stress, primarily in financial markets, on account of global spillovers, which is reflected in the marginal rise in the financial system stress indicator, an indicator of the stress level in the financial system, compared to its p...
Post a Comment
Read more

Retail inflation cools to a six-year low of 2.82% in May on moderating food prices

By
  New Delhi: Retail inflation in India cooled to its lowest level in over six years in May, helped by a sharp moderation in food prices, according to provisional government data released Thursday.Consumer Price Index (CPI)-based inflation eased to 2.82% year-on-year, down from 3.16% in April and 4.8% in May last year, data from the Ministry of Statistics and Programme Implementation (MoSPI) showed. This marks the fourth consecutive month of sub-4% inflation, the longest such streak in at least five years.The data comes just days after the Reserve Bank of India’s (RBI) Monetary Policy Committee cut the repo rate by 50 basis points to 5.5%, its third straight cut and a cumulative reduction of 100 basis points since the easing cycle began in February. The move signals a possible pivot from inflation control to supporting growth.Food inflation came in at just 0.99% in May, down from 1.78% in April and a sharp decline from 8.69% a year ago.A Mint poll of 15 economists had projected CPI ...
Post a Comment
Read more