Maruti Suzuki, M&M To gain most From GST: file

Maruti Suzuki and M&M are likely to gain from GST, analysts say (Representational image)

the products and offerings Tax or GST invoice is returned in news, with the authorities aiming to push the long-awaited legislation in monsoon session of Parliament. The possibility of the GST getting into effect from next 12 months has led investors to hunt for shares so as to benefit the most from the key tax reform.

the automobile space is probable to be a key beneficiary assuming proposed widespread GST fee of 18 in keeping with cent, analysts say. consistent with Kotak Institutional Equities,

1) general tax quotes on small motors (vehicles much less than four metre in period and engine length much less than 1,2 hundred cc/1,500 cc for petrol/diesel variants), two-wheelers and commercial vehicles will come down to 18 according to cent of ex-showroom fees from round 24 in line with cent presently, leading to 7 in line with cent discount in car charges.

2) Assuming 40 in line with cent GST price, prices of mid-sized cars and SUVs (automobiles greater than four metre in duration and engine size much less than 1,500 cc) will likely increase by way of 6 in keeping with cent as present day mixed tax fee is 33 in line with cent of ex-showroom prices.

3) costs of huge cars and SUVs (cars with engine length more than 1,500 cc) will probable continue to be unchanged given this segment is under 30 per cent excise duty bracket currently.

4) For tractors, 12 according to cent can be the likely GST price, which is essentially similar to the overall tax price below cutting-edge state of affairs.

these probably changes can be positive for Maruti Suzuki, India’s biggest carmaker, and software vehicle manufacturer M&M, the brokerage said.

“We consider that in the passenger automobile segment, demand ought to shift closer to compact sedans and SUVs due to further pricing advantage over mid-sized and huge automobiles/SUVs,” said Hitesh Goel of Kotak.

consistent with the brokerage, GST implementation will cause 5 in step with cent weighted common rate advantage on Maruti’s product portfolio. For M&M, corresponding price gain on universal portfolio would be lower at 2.6 in step with cent because of negligible benefit in tractors and large SUV segments, it delivered.

Maruti Suzuki stocks closed 2.5 in line with cent higher at Rs four,207, even as M&M ended flat at Rs 1,354.60 in comparison to one.25 according to cent advantage within the broader Sensex.