GST rate cut: In its 28th meet, the Goods and Services Tax (GST) Council approved reduction in the rate for 88 consumer centric items such as cosmetics, refrigerators, sanitary napkins, washing machines, and small screen televisions. “Today’s decisions of the GST Council were guided by simplification, rationalisation… Every state wanted that the rates on these items be lowered for benefit of middle-income households… It has also been decided that the GST Council will rise above revenue consideration and focus more on job creation and economic growth,” Finance Minister Piyush Goyal said. Here is what global brokerages have to say on these two bluechip stocks.
Morgan Stanley on Havells
Morgan Stanley maintains ‘overweight’ rating on the Havells’ stock with a target of Rs 642 implying an upside of nearly 6 percent from the intraday high today. The reduction in GST rates for some products is marginally positive, says Morgan Stanley. The global brokerage also sees faster revenue generation for company in the medium term. The stock is trading at Rs 599.50 up 7.15 percent in the early trade today.
PhillipCap on Havells
PhillipCap maintains ‘neutral’ rating on the stock with a target of Rs 610. The stock will trade at premium valuations due to its strong brand and distribution reach. The global brokerage also maintains a target multiple of 40 times on FY 20 EPS, and also see a limited room for an upside.
Kotak Institutional Equities on Asian Paints
Kotak Institutional Equities maintains ‘reduce’ rating on the stock with a target of Rs 1,275 implying an downside of nearly 13 percent from today’s intraday high of 1,465. The previous target was at Rs 1,100. The GST rate cut on paints and varnishes to 18 percent could boost to earnings, says Kotak Institutional Equities on Asian Paints. The brokerage also says that a likely acceleration in pace premiumisation could also be observed going ahead. The stock is trading at Rs 1,448 up by 3.66 percent in the opening trade today.
Fast-moving consumer goods, which were badly hit after demonetisation, could gain from the cut in rates, which could have an impact ahead of Assembly elections in three heartland states and the general election subsequently. The good monsoon has inspired forecasts of a steady pick-up in rural and urban demand, and the GST rate cuts could catalyse a feelgood sentiment ahead of the festival season.