Much-awaited Goods and Services Tax Bill was approved by Rajya Sabha on Wednesday. The bill will bring in a unified tax regime in the country by replacing state and local taxes. According to Angel Broking, implementation of the bill will benefit broader consumer-oriented companies as there would be a demand shift in favour of the organised sector at the cost of unorganised players triggered by cost dynamics.

Angel Broking recommends 5 stocks which will benefit from the GST:

1) Amara Raja Batteries: Amara Raja is the second largest lead acid storage battery manufacturer in India. Implementation of GST will benefit the company in the form of cost savings due to lower tax expenses and will enable the company to compete better and garner market share from unorganised players across markets.

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2) Bajaj Electricals: The company is among the top four consumer durables players in the country. Bajaj Electricals will benefit from GST as cost savings on account of lower taxes will help it bridge the pricing gap as compared with the products of unorganised players and this in turn will lead to market share gains for the company.

3) Century Plyboards: Angel Broking expects consumer preference will shift towards Century Ply once the GST Bill is implemented. The company enjoys brand recall and a quality product portfolio.

4) V-Guard: The company generates around 66 per cent of its revenues from electrical or electro mechanical division, which is into manufacture of pumps, cables and wires, water heaters and fans. Given the robust market positioning of V-Guard in areas it operates in, the brokerage house believes the company to further gain market share from the unorganised players.

5) Maruti Suzuki: After the passage of GST, Angel Broking expects reduction in incidence of indirect taxes at the consumer level. The move will lead to demand expansion, thereby benefitting players like Maruti Suzuki which have over 80 per cent market share in the entry level passenger vehicle segment.

Recommendations from Motilal Oswal post GST nod

1) Asian Paints: With the implementation of GST, the gross effective tax rate for Asian Paints will reduce from 26-28 per cent currently to 18 per cent. Motial Oswal believes that the savings on tax outgo will either be retained and drive margin expansion or partially passed on to the consumer or trade to drive volume growth. There exists a sizable unorganised market of around 35 per cent in the paints industry. Asian Paints would also benefit from gradual reduction in competition from unorganised players, with reduction of pricing gap.

2) Hero MotoCorp: GST will bring around 8 per cent decline in on-road prices for entry level segment and executive segment like Splendor and Passion. The move would improve affordability and expand addressable market for this price-sensitive segment.

3) ACC: Reduction of effective rates and supply chain costs will bring tangible benefits to the overall cement space, however, Motilal Oswal believes the move will be more positive for ACC, where earnings sensitivity will be higher, assuming homogenous benefits in taxation.

4) Inox Leisure: Inox will be a key beneficiary due to reduction of blended effective tax rate and will be able to retain part of it. Benefit of input credits on lease and maintenance of properties will be available which was not allowed under erstwhile regime. EBITDA margin may expand by 200-300 basis points with the passage.

5) Pidilite: Gross effective tax rates are expected to fall to around 18 per cent from 26-28 per cent under the current regime. Post GST, it would also benefit from gradual reduction in competition from unorganised players due to reduction of pricing gap.