Published : August 23, 2017
Indian stocks are expected to be affected by GST implementation. It will help to reduce the cost of raw material procurement and will also have a significant effect on other costs like freights and logistics of the manufacturers. The cost reductions aftermath GST are largely going to benefit companies in organized sectors. whose consumers are multi state based as well as who manages inventory and production at limited geographies. Bosch Ltd, Bajaj Electricals, Kajaria Ceramics Ltd, Titan Company and Maruti Suzuki are hand picked for a growth portfolio from among others.
In the present article five Indian stocks are picked and analyzed for the future prospects of its share price movement. These shares are expected to benefit at large due to the implementation of GST.
The Goods and Services Tax amendment act was passed by both of the houses of parliament in 2016. And it was implemented in July 2017. GST eliminated many indirect taxes like VAT, Central Excise duty, Sales Tax, Service Tax etc. The GST implementation resulted in cease of existing multiple taxing at the hands of state and center.
It is mainly classified into two categories. First one is CGST which means Central Goods, which will be levied and collected by the central government and it will replace central excise duty service tax and additional customs duties and service tax.
The second one is SGST, the State Goods and Service Tax which will be levied and collected by the states and it will be replaced by the VAT, Entertainment Tax, Luxury Tax and Electricity Tax. Final rates of GST are yet to be decided.
GST is considered as a potentially resilient tax reform in recent time because it will eradicate the intricacies of present multilayer and differential tax system of the country. This tax is expected to widen the tax base and streamline the tax system which in turn will ease the concerns of business.
At the same time, there are some positive aspects of GST implementation for the Indian companies. Indian companies in the logistics and transport sector will come out as one as the largest beneficiaries of the GST. The transit time of goods will also see the reduction as the state level entry tax will be abolished and due to this there might also opportunities arise for freight operators due to the consolidation of warehouses based on easiness of geographical reach.
Sectors which can see GST as a favorable tax and in turn will be benefited by the long impending tax are auto, consumer durable, electric goods, and building materials. Indian stocks from these favorable sectors that are anticipated to be benefited by GST are discussed below –
Among the 5 Indian stocks, Bosch Ltd comes first which is the leading player in auto ancillaries sector in India. It is a supplier of technology and services including industrial technology and consumer goods, energy and building technology.
Bosch operates nine companies in India. Post GST it can consolidate its warehouse and logistic based on geographical needs. Due to this, there will be non-payment of state level taxes which in turn will result in huge cost saving to the company. This will result in the positive way to the company’s both top-line as well as bottom-line.
In terms of revenue, fuel injection equipment generated revenue of Rs.40396 million in FY December 31, 2013, which rose to Rs.49297 million on March 31, 2015. Injectors, Nozzles and Nozzles Holders generated revenue of Rs.21270 million in FY December 31, 2013, which rose to Rs.32601 million in FY March 31, 2015.
Starter and generators generated revenue of Rs.10916 million in FY December 31, 2013, and it rose to Rs.14448 million in FY March 31, 2015. Revenue from portable electric power tools was Rs.7146 million in FY December 31, 2013, which rose to Rs.9961 million in FY March 2015.
Others sources of revenue generated Rs.12372 million in December 2013 which rose to Rs.19297 million on March 31, 2015.
On charts, Bosch Ltd is found correcting in short term post its uptrend. Its major support at downside is at 22200 levels and then 20500 levels. On the upside, it will face strong resistance at 24600 levels and at 25560 levels. Only sustaining above the support of 20500 levels chances of the breaking of all time high which is at 26811 will increase.
The Bajaj Electricals is a leading consumer durables company. It is the part of Rs.380 billion Bajaj group. Bajaj Electricals has diversified its business into lighting, luminaries appliance, fans, LPG based generators, engineering, and projects.
As per the annual report of the company, the revenue from lighting manufactured was Rs.89981.93 lakhs in FY March 31, 2015, which rose to Rs.105930.31 lakhs in FY March 31, 2016. Revenue from consumer durable was Rs.202927.35 lakhs in FY March 31, 2015, which declined to Rs.201122.45 lakhs in FY March 31, 2016.
The revenue from engineering and projects was Rs.7770.54 lakhs in FY March 31, 2015, which almost doubled to Rs.15826.56 lakhs in FY March 31, 2016. Revenue from other sources was Rs.2178.31 lakhs in FY March 31, 2015, which declined to Rs.2021.18 lakhs in FY March 31, 2016.
Presently Bajaj Electrical Ltd prices were in correction mode. And this Indian Stocks might get strong support at 230 levels. Below its support is at 203 levels. However, prices may not break the support due to the positive effect of tax reduction. It may resist at 278 levels and above it at 333 levels.
Kajaria Ceramics Ltd is the largest manufacturer of ceramic tiles in India with the annual capacity of 68.60 million square meters production. It has nine operating plants across the country.
It offers more than 1500 options in ceramic wall and floor tiles. According to its annual report of 2015-16, the revenue of the company has increased in the year ended March 31, 2016. Revenue from operations includes sales of products, other operating revenue, and revenue from other sources.
Under sales of products, tiles sales generated Rs.2370.74 Crore in FY 2015 which rose to Rs.2606.39 Crore in FY 2016. Revenue from the sale of power was Rs.1.44 Crore in FY March 31, 2015, which rose to Rs.1.65 Crore in FY 16. Other operating income in FY March 31, 2015, was Rs.5.88 Crore which also rose to Rs.6.82 Crore in FY March 31, 2016.
Other income in FY 2015 was Rs.8.49 Crore and in FY 2016 it rose to Rs.17.61 Crore. Prices of Kajaria Ceramics Ltd after a long rally may see some correction and it may go towards strong support of 1150 levels.
Below it price may support at 1030 levels and after this price may come to its main uptrend. It may face resistance at 1370 levels and then 1485 levels. A fresh rally is possible either on correction from the supports or above 1280 levels.
Titan Company is a leading manufacturer of watches, jewelry, fragrances, and eyewear. It is the world fifth largest brand of watch manufacturer.
According to its annual report for the FY 2015-16, total revenue FY 2016 decline by 5% from previous year. It was Rs.1197379 lakhs as on March 31, 2015, which declined to Rs.1132889 lakhs on March 31, 2016.
The company generated revenue from sales of manufactured goods (watches, jewelry, eyewear and others). It gave revenue of Rs.982360 lakhs in FY 2015, which declined to Rs.953936 lakhs in 2016. Traded goods of the same category generated revenue of Rs.197719 lakhs in 2015 which declined to Rs.164434 lakhs 2016.
Operating revenue from other sources in 2015 was Rs.11217 lakhs which also declined to Rs.8763 lakhs in 2016. Other income of the company on March 31, 2015, was Rs.7058 lakhs which declined to Rs.6436 lakhs in 2016.
The Titan share price is in an uptrend, even though the revenue has declined in the current year. And it has strong support is at 385 levels. The only breach of it may drag price towards 318 levels.
On the other hand sustaining above 385 levels will lead it towards break of resistance at 420 levels. Above it, 466 levels will act as resistance. A possibility of the rise in revenue in coming quarters is high post GST. This may give a trigger to make new highs in months to come.
Maruti Suzuki is our last pick which may get the positive effect due to GST implementations. It is an automobile manufacturer in India with service network across 1500 cities and towns. Maruti sales network is in 1471 cities across the country.
It has 47% market share of total Indian passenger car market. The total revenue of the company has increased in the year ended March 31, 2016. It increased from Rs.508022 million in the previous year to Rs.582082 million in the current fiscal. The revenue of the company from vehicles segment in 2015 was Rs.490806 million which rose to Rs.582950 million in 2016.
Revenue generation from spare parts/dies and molds components was Rs.46879 million in 2015. Also, it rose to Rs.55719 million in 2016. While the operating revenue of the company in 2015 was Rs.13651 million which increased to Rs.13959 million in 2016. At the same time, other income declined in 2016. As other income in 2015 was Rs.8316 million and in 2016 it was Rs.4619 million.
Most noteworthy, automobile sector will be benefited by GST. Prices of Maruti Suzuki is in the uptrend. On the upside, it may face the resistance of 4985 levels and above it at 5282 levels. But on breach of 4860 support levels will give next support at 4740 levels and then 4560 levels.
Technical analysis gives that this Indian stocks may continue with the uptrend. And above 5000 levels it may move to next resistance at 5300 levels. On the other hand, the downside Maruti support is at 4762 levels and below it around 4400 levels. Probably, if it moves down then buying may arise again from around these supports.
September 9, 2017 4:56 pm
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