Jefferies on new GST rates: To boost festive sales; FY26 revenue hit to ease, M&M & ITC key beneficiaries

GST rate overhaul aims to boost festive sales, with M&M and ITC set to benefit; find out how the reforms may impact the economy and stocks.

Written by Sumana Sarkar

September 4, 2025 13:12 IST

Jefferies on GST rates, GST 2.0 impact, M&M share price, ITC stock, cement stocks India

Jefferies sees GST cuts boosting festive demand; M&M, ITC, cement stocks in focus

The big news at this hour- In the wake of the 50% Trump tariff, the Government is on a reform overdrive, and the GST rates have been overhauled. The new GST rate is in place, and the Government has confirmed implementation from September 22. International brokerage house, Jefferies sees festive demand getting a positive boost as a result. Additionally, they see the revenue hit easing and being offset by higher demand

The Government has now adopted a two-rate structure and scrapped the 12% and 28% tax slabs. However, a concern that was raised is would moving most items to the lower 5% and 18% tax slab lead to revenue loss. Based on the FY24 consumption pattern, the Govt expects a Rs 48,000 crore impact on collection due to these tax cuts. However, Jefferies sees the impact easing by the end of FY26. As per their calculation, they estimate the impact to be around “Rs 22,000-24,000 crore in total (state and centre put together for the 7-month impact for FY26), as demand buoyancy should lower the impact.” Moreover, they “do not expect FY27 to show any negative impact on fiscal, as conversion of ‘GST Cess’ into ‘GST’ should offset the impact.”

Jefferies on new GST rate: The big sector impact

Jefferies highlighted that most GST rate changes were on expected lines. “Positive surprise came in for staples and ITC. Cement stocks haven’t really moved since Aug 15 (When PM Modi announced the GST reforms by Diwali) and should bounce now, and so should M&M,” Jefferies pointed out. They also see the new rates as a “strong positive for other autos also,” but added that stocks have moved up already.

Jefferies on new GST rate: Impact on inflation, RBI rate cut

According to Jefferies, the GST cuts should help CPI inflation by 25 bps and this also increases the “probability of a 25 bps rate cut in the upcoming (RBI) meeting,” they added. Jefferies also did not rule out an “outside chance of 50 bps cut,” by the RBI going forward.