GST is just around the corner. There are many articles about the stocks which are likely to benefit from GST. Most of the companies mentioned in these articles are either logistics companies or Consumer goods companies. I have created this thread to discuss long term implications of GST on every industry. Views of fellow members are invited.
http://m.timesofindia.com/india/Congress-hints-at-dropping-key-GST-demand/articleshow/53135592.cms
1 Like
I have spend some time on this, but I could not get any clarity. All the sectors seems to benefit in one or another way except Service tax can go up to 18%.
Here is the list of logistics companies, which looks like the straight forwards beneficiaries
sical logistics
bluedart
mfl india
gati
gateway distriparks
allcargo
kesar terminal
north eastern carrying corporation
tiger logistics
snowman
vrl
til
sanco trans
sanghvi movers
container corporation
navkar
patel integrated
mahasagar travel
transport corporation of india
All these seems to be trading at very high multiples and I do not think they have any value left.
Also entertainment companies can benefit from even entertainment tax - Some states have up to 50% tax on movie tickets
inox leisure
pvr
Sanitaryware sector faces about 30 percent tax rate, including about 12.5 percent excise duty, 12.5-15 percent VAT and 2 percent central sales tax.
If the GST rate is 18 percent [as proposed], at least 10 percent benefit will be passed down to the end customers and it will also bridge the gap between organized and unorganized players in the sanitaryware industry
2 Likes
IMO impact of GST is somewhat over rated. It will have long term benefits and very valuable. One needs to keep in mind that lots of inputs produced by unorganised sector goes into organised sector for further processing. These smaller unorganised players will be taxed properly if end processors want to keep the benefits of lower taxation. However, integrated players will have benefits in short term as well.
India’s Consolidation Wave" Talk delivered by Jatin Khemani at FIL Alumni meet
i feel the stocks of companies likely to benefit from GST like ply manufactures, footwear, auto parts are already trading at rich valuations. Probably the GST is being discounted in the price.
Also GSt will take one year to come in effect , then there will be initial glitches , issues so i guess it will take at least 2 years to reflect on the companies balance sheet.
2 Likes
My understanding of GST says that the most beneficial segment of GST would be the warehousing companies.
Now companies, transporters etc don’t have to keep multiple,small warehouses in different parts of the states.One large warehouse at appropriate location would be sufficient.
So companies providing warehousing facility or logistics companies having large warehouses would have an edge.
1 Like
MIght be a naive question.
What is the advantage to govt by introducing GST? Earlier they would get 30% , post GST they will receive 18% so what is the advantage to govt? I think there is some catch here.
Hope this helps:
GST: Ushering in a new era
http://www.motilaloswal.com/site/rreports/HTML/636047775851758278/index.htm
I am bumping this post up.
Any update post the release of the tax slabs on the sector impacts
GST is going to force automation of lots of Business. SME and Proprietor will be forced to automate accounting, invoicing and inventory management. Please reply if you find any listed IT company positioned to benefit from this.
Good discussions on this thread so far… one interesting angle is that in the current and maybe even the next quarter, earnings of few companies may be subdued due to gst and hence we may be able to get few good stocks at lower prices.
Eg: pidilite, etc
Biggest beneficiary tally solutions, I am trying to find some one who can provide unlisted shares of this company
1 Like
share with me as well details. I heard these ppl have some but don’t know about their credentials http://www.abhisheksecurities.com
tally solutions is not listed in their list. Besides i don’t trust much share related companies from kolkata & indore. heard many fraud cases.
On further digging I found an IT company which would benefit from this:-
Script: Alankit (BSE:531082,NSE:ALANKIT)
CMP: 35.25
Market Cap: 503 crores
Website: https://www.alankit.com
*The company is into a variety of businesses related to financial sevices,e-governance,stock broking etc. It is also a Registrar.
*The company is a GSP (GST Suvidha Provider)
*The company provided solution-GST Muneemji helps Tax professionals and taxpayers in organizing the Invoice details and filing the GST returns.
Basic chain of events post-GST:
*The process of GST starts with creation of sales and purchase invoices with Government specified line items(eg:HSN & SAC code,GST rates,GSTIN’s of related parties apart from regular invoice details such as Date,quantity,item description,price etc.)
*Few days after the end of the month, these invoices should be uploaded under specific returns:
GSTR-1(outward supply/sales) to be filed on 10th
GSTR-2(inward supplies/purchase) to be filed on 15th
GSTR-3-auto generated from the above returns, it consists of the full data with GST liability
Now how would a GST solution help?
-Due to the infinite number of line items in each invoice, it would be impossible to check for mistakes in each an every invoice for a business. It would be even more cumbersome for a Tax professional since he will have to file for multiple clients. Thus a GST solution like would tremendously bring down the work required,by only separating out the invoices which seem to have error/mismatches.
Link to Alankit’s GST solution: http://www.alankitgst.com/Home.html
Being a relatively complicated system, it will take time for people to understand. And a GST solution would only make it easier provided the user interface of the solution is simple. Apart from that it is probably the only LISTED IT company which could benefit from this.
Advantage compared to Tally: This is a cloud based solution which is a huge advantages,since the data can be accessed from any device at any point of time.Also there is no risk of data loss.
Other points:
*Management has gone on record to say that the expect 40% market share as a GSP.Hope they are able to deliver on their promises
Link: http://www.moneycontrol.com/news/business/companies/expect-40-mkt-sharethe-gst-suvidha-provider-space-alankit-919416.html
*Promoters increased stake 3-fold from 23% to 68%
On the technical side the stock is range bound after the runup it had when promoters increased stake.
Further views are invited
Disc: Invested, I do not have any finance background and am relatively new to the stock markets. Please do your own due diligence
Note: This is one of my first posts on the forum, though i’ve been a reader for a long time. Look forward to your comments
4 Likes
One interesting area to look out for is restaurants. Under the current GST rules - input credit is available in goods procured , capital or raw material to restaurants - which was previously not available. Restaurants are working capital an Fixed cost intensive businesses - a deadly combination. An otherwise profitable restaurant can go bellyup because there is no working capital and a high fixed cost base - and many have.
Raw materials constitute anywhere between 30% - 50% of sales and a 5% credit on this could free up 1.5% of sales for WC needs (assuming 30% of sales as raw material ). This is like an interest free loan of 1.5% of sales. Credit is also available for capital goods purchases. Both should free up a meaningful amount working capital.
Do you really know what’s their definition of market of Direct Tax Compliance?
It generally include wide array of services like Tax Consultancy, filing returns, Computation of Returns, Tax Audit… etc… Does Alankit does any of this? NO, it doesn’t. His meaning of direct tax compliance is helping issue of PAN cards and filing of manual returns. Nothing else. And I suspect that too is mainly done through another group company called Alankit Assignments. Also, I believe that some of this revenues might be one time by luring people into obtaining their franchise.
Whatever revenues and profitability you are seeing in this company will evaporate when bull market ends. Group company also includes Stock Broking companies that itself should raise doubts on the management. They are conveniently giving misleading statements on TV and there only one thing we can do regarding that. SKIP IT.
Just a small look at the company throws many red flags.
2 Likes
If someone could help me with projection of Govt for GST collection for financial year 2018. I shall be thankful.
The figures released till now are for GST tax collection are
(All figures in crores, k means thousand)
July - 95k
Aug - 91k
Sep - 92k
Oct - 83k
Nov - 80k
My understand is both central and state governments will share revenue from GST collection.
1 Like
