|What kind of cos will benefit if GST is implemented?|
|Nilesh Shetty, Associate Fund Manager-Equity, Quantum AMC tells the sectors that would be biggest beneficiaries of GST.
Below is the verbatim transcript of Nilesh Shetty’s interview with Ekta Batra & Sonia Shenoy on CNBC-TV18.
Sonia: If the goods and services tax (GST) gets passed in this form that we are talking about, 18 percent or below, what do you think or which are the stocks you think could be immediate beneficiaries from this?
A: We have understood from experts that the effective tax rate on the indirect side for a lot of the sectors ranges from about 22 percent to about 30 percent. So companies in the auto space, auto ancillary, capital goods would be some of the big beneficiaries of GST passing through if the effective GST rate is lower than that. Our sense is wherever the effective incidence of tax on the indirect taxation side is higher than the GST rate, they would be the real beneficiaries. A lot of the sectors and we understand that auto, auto ancillary would be one of the big beneficiaries, capital goods could be one of the big beneficiaries where the indirect tax incidence right now ranges from 23 to 30 percent.
Ekta: If you had to take positions in your own portfolio or your clients’ portfolios ahead of the possibility of the GST being passed, which are the sectors or stocks that you might take exposure in?
A: We are long-term investors. We do not try and time regulatory incidence of movement in stock prices but I assume someone who is trying to time this, would need to look at the indirect tax incidence of companies where they are paying taxes higher than GST rate and that would theoretically be the savings that those companies make.