1. GST will benefit logistics companies; 5 stocks to consider

GST will benefit logistics companies; 5 stocks to consider

GST Bill has been dominating news space ever since the monsoon session of Parliament began on July 18, impacting the movement of stocks in various sector, including logistics.

By: | New Delhi | Updated: August 3, 2016 11:07 AM
bse sensex nse nifty GST Bill GST Bill has been dominating news space ever since the monsoon session of Parliament began on July 18, impacting the movement of stocks in various sector, including logistics. (Photo: PTI)

GST Bill has been dominating news space ever since the monsoon session of Parliament began on July 18, impacting the movement of stocks in various sector, including logistics. Stocks of logistics companies like North Eastern Carrying Corporation, Coastal Roadways, TAAL Enterprises, Chartered Logistics and Allcargo Logistics have surged by 17.74 per cent, 17.74 per cent, 16.70 per cent, 16.67 per cent and 10.51 per cent from July 18 to August 2. The benchmark BSE Sensex gained 0.85 per cent during the same period.

Other logistics majors such as VRL Logistics, Transport Corporation of India, Container Corporation of India and Snowman Logistics gained 8.46 per cent, 7.20 per cent, 6.59 per cent and 6.51 per cent, respectively, since the beginning of monsoon session in the Parliament. The bill is slated to be tabled in Rajya Sabha around 2 pm on Wednesday, which experts believe will benefit the logistics sectors the most among others.

Vaibhav Agrawal, vice-president and head of research at Angel Broking believes Transport Corporation of India (TCI), VRL Logistics and Navkar Corporation could benefit if GST is implemented. TCI’s pan-India scale gives it an advantage in higher margin segments of the logistics industry. The GST implementation will also lesser down times at state checkpoints and result in optimised delivery times which may VRL Logistics.”

Passage of GST Bill will bring changes in transportation of goods like number of days, cost of carrying and octroi duty. At present, every state levy different rates of taxes which affect business decisions on logistics and distribution systems. GST Bill, which is likely to get the passage this time, will benefit logistics companies as there will be one tax rate across the country. Also, movement of goods would be easier resulting in consolidation of logistics systems for the companies.

Rohit Gadia, founder and chief executive officer, CapitalVia Global Research said, “Gati, VRL Logistics and Allcargo Logistics should be in watch list if GST becomes reality.”

According to HSBC report, logistics sector will benefit from the removal of inefficiencies in interstate taxation and at check posts.

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