New Delhi, Sep 9 : GST 2.0 India rollout is expected to boost consumption, with mass consumers following the formalisation trend and premium buyers seeking differentiated offerings, according to a report by Emkay Global Financial Services.
The report said improving macroeconomic tailwinds continue to support elevated valuations in the consumer sector, though broader growth support has yet to arrive.
“The anticipatory rally ahead of the GST 2.0 announcement rewarded investors. We factor in benefits and raise target prices of select stocks. Our stock calls remain firm,” the report noted.
Proposed GST rates set a weighted GST of 6% for food and beverages and 12% for home and personal care (HPC) products. The GST Council rationalised rates across food and essential personal care categories.
The council kept home care products under the 18% slab, while daily-use personal care items received rate cuts. Discretionary items remain at 18%.
“Our analysis shows the organised food and beverage segment, with a total addressable market of Rs 7 trillion (90% penetration; 30% organised), will see a reduction in the weighted GST rate from 10% to 6%,” the report said.
Similarly, the organised home and personal care segment, sized at Rs 2 trillion (65% penetration; 67% organised), will experience a 5-percentage-point reduction to 12%.
“Within FMCG, soaps, oral care, hair care, biscuits, and salty snacks will benefit the most. Rate cuts in personal care products tackle slowdown concerns. Biscuits and salty snacks will foster formalisation,” the report added.
Over the past year, regulators strengthened sector support. This move sets the stage for accelerated growth. Companies with strong execution and well-aligned portfolios are likely to gain the most.
“Our covered companies will benefit from accelerated formalisation. Strong execution remains crucial to fend off competition from new-age brands. The anticipatory rally ahead of GST 2.0 rewarded investors,” the report concluded.
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