Top 10 Best Stocks to buy in 2017 which would benefit from GST

Top 10 Best GST Stocks to buy in 2017 in IndiaTop 10 Best Stocks to buy in 2017 which would benefit from GST


Suspense has gone. Govt. of India has announced that it would implement Goods and Services Tax (GST) from 1st July, 2017 without fail. Companies and Traders are not yet ready for GST implementation. Some of the stocks have already rallied upon GST rates being announced. While GST benefits can be seen across various sectors, the benefits would come only after few quarters. Which are the Top 10 Best GST Stocks to buy in 2017? Which are the 10 Best Stocks to buy in 2017 that can get benefitted with GST regime?

Also Read: Which are the Best Midcap Stocks for 2017 post Q4 Results?

What is GST in India and which sector would benefit?


Goods and Services Tax (GST) would replace 17 indirect taxes being imposed for a product or service being sold in India. GST rates falls under only 4 tax slabs i.e. 5%, 12%, 18% and 29%. Biggest beneficiaries would be the industries where there is high unorganized sector. FMCG, Dairy, Logistics and Warehousing sector would benefit more as they can save more time and fuel at state borders. Power Sector would gain more as thermal coal has been categorized under 5% GST compared to earlier taxation of 12%.  

Top 10 Best Stocks to buy in 2017 which would benefit from GST


Here is the list of 10 best stocks that can get benefitted from GST in 2017. Some of these companies can see immediate impact from Q2 and few of them could see impact from Q3 onwards.

Top#1 – Prabhat Diary – CMP – Rs 131


It produces value added products like speciality dairy powder, Ghee and condensed milk and cheese. It also has non value added products like Milk. Management expects to increase cheese utilization from 20% to 50%. 70% of the milk procurement is direct. Food grains, milk and other milk products of daily usage are exempted from taxation of GST regime hence this would boost the company sales and profits.

Last week Govt. of India has banned milk products which would help companies like Prabhat Diary to boost their sales.

Last week, ICICI Direct initiated coverage on this company and indicated BUY rating of the stock. I feel this could be one of the best stocks to buy in 2017 that would get benefitted from GST.

Top#2 – Symphony – CMP – Rs 1,329


Industries having highest unorganized sector market would benefit more from GST. Air coolers have 70% to 80% in unorganized sector. Its indirect taxes are 27% to 28% that would get reduced to 18% as per GST regime. Symphony which is the leading player in this segment would benefit more.

In the last 3 months, ICICI Direct and KR Choksey have given their BUY recommendation for this stock with a target price of Rs 1,623 and Rs 1,653 respectively.

Top#3 – Dabur India – CMP – Rs 289


Soaps and Oils fall under lower tax bracket of 18% as per GST regime. Currently it falls under 26% to 28% tax bracket. Honey is exempted under GST now. Dabur India would get benefitted out of these GST changes.

In the last 3 months, Edleweiss, ICICI Direct, Dolat Capital  and HDFC Securities have given their BUY recommendation for this stock with a target price in the range of Rs 292 to Rs 327.

Also Read: Top 10 Agressive Mutual Funds to invest in India

Top#4 – Colgate Palmolive India – CMP Rs 1,106


Colgate India’s toothpaste contributes to 80% of the company sales. Under GST regime, the rate is reduced from current 25%-26% to 18% as per new GST structure. With lower tax, it can regain some of the market share.

Top#5 – Ashok Leyland – CMP Rs 92


As per its management, hub and spoke model of transportation of goods would gain by GST regime and it would improve the sales of the company.

Top#6 – ITC – CMP Rs 320


Taxes by various states on Cigarettes make Tax amount very huge. With GST regime, there is cap on taxes which is positive for GST. It would have uniform taxes across states which would benefit companies like ITC.

In the last 3 months, ICICI Direct, Edelweiss, Axis Direct and Geojit Fin Services have given their BUY recommendation for this stock with a target price in the range of Rs 336 to Rs 370.

Top#7 – Hindusthan Unilever Limited (HUL) – CMP Rs 1,096


Toothpaste and soaps contribute 25% of HUL revenue. Lower taxes on toothpaste and soaps would benefit HUL. It is expected that people would move from unorganized sector to organized sector by purchasing branded products. Also its raw materials are taxed at GST Rates of 0% or 5% which would get benefitted.

In the last 3 months, ICICI Direct, Edelweiss and Motilal Oswal have given their BUY recommendation for this stock with a target price in the range of Rs 1,106 to Rs 1,165. I feel this could be one of the top stocks to buy in 2017 that would get benefitted from GST.

Top#8 – Tata Steel – CMP Rs 507


One of the biggest sectors that would get benefitted from GST is Steel Sector. New GST Rate is finalized at 18% for Steel. Steel Sector key inputs like Coal and Iron Ore are pegged at 5% (which is lowest tax slab in GST) which would help such steel companies having lowest input costs.

In the last 3 months, ICICI Direct, Edelweiss and Motilal Oswal have given their BUY recommendation for this stock with a target price in the range of Rs 550 to Rs 650. I feel this could be one of the good stocks to buy that would get benefitted from GST in 2017.

Top#9 – JSW Steel – CMP Rs 196


Like I indicated above, one of the biggest sectors that would get benefitted from GST is Steel Sector. JSW Steel would also get benefited from new GST regime.

In the last 3 months, ICICI Direct and HDFC Securities have given their BUY recommendation for this stock with a target price in the range of Rs 215 to Rs 225.

Top#10 – Britannia Industries – CMP Rs 3,650


Currently some of the FMCG Products are marked to nearest existing slab. However, with anti-profiteering clause in place in GST, companies need to pass on the benefits to consumers. This would help in faster consumption of products and consumers can shift from unbranded products to branded products. This would help companies like Britannia Industries from such benefits of GST.

In the last 3 months, Edelweiss and KR Choksey have given their BUY recommendation for this stock with a target price upto Rs 3,775.

Also Read: Best Largecap Funds for 2017 to invest

Should you buy these stocks now?


Some of these stocks are already rallied once GST rates were announced. However, one can look at some correction of these stocks and start investing them. One should also look for latest Qtr financial Performance before investing in such companies.

Disclaimer: I do not hold any of these stocks as of now, but would like to invest in such stocks in coming months.

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Suresh

Top 10 Best Stocks to buy in 2017 which would benefit from GST

5 comments

  • Devjit Saha

    Excellent calls as it stands after 1st day of gst roll out…all in positive … Plz give some views on small cap stocks also…I hv asked same advice few days back but suresh you Dint rply regarding dis topic..

  • Sanjay

    I think Parag milk food will be better option than prabhat diary .As they use to sell their products in Gujrat /Maharastra as Gowardhan which is very famous and economical also used release innovative products with GST rate 0% this stock will boom in long term need your views expert!

  • Rajnikandh J

    Is ITC target price going to be 98 to 125. Then this will be huge loss. CMP is 308.

  • Arunkumar

    HI Suresh,

    I am following you for quite sometime. You are doing great work. 

    The CMP of ITC already in a range of 310+. You may need to review its target price.

     

    Continue your good work. 

    Regards,

    Arun

     

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