CLSA has highlighted a significant boost for the consumer sector following the GST Council’s approval of a new two-tier tax structure of 5% and 18%, effective from September 22. The restructuring moves several FMCG essentials such as toothpaste, soap and packaged food items into the lower 5% slab from the earlier 12–18% range.
The brokerage estimates this will lead to a 6–11% reduction in consumer prices, a move it expects will support demand recovery. FMCG demand is likely to get the biggest uplift, with food and home & personal care (HPC) categories benefiting the most from lower prices.
Among listed companies, CLSA sees Britannia Industries and Colgate-Palmolive as the top beneficiaries given their near-complete portfolio coverage under the reduced 5% GST slab. The brokerage also noted that quick service restaurants (QSRs) and alcoholic beverage makers stand to gain from input tax reductions, as these businesses do not typically receive input credit.
According to CLSA, the move not only aids household consumption but also reduces structural inefficiencies for companies that had previously absorbed higher tax costs, setting up the sector for stronger volume growth.
Disclaimer: This article is based on brokerage views as cited. The views expressed are those of the brokerage and do not represent investment advice.
