Consumer – Sector Update – GST rates boost – will history repeat itself?
Published on 22 Sep 2025
Our recent channel checks indicate that demand remained steady through July and August. However, September witnessed a temporary slowdown, primarily due to excessive rains and deferment of purchases due to GST rate cuts. Dealers remain optimistic and are expecting a strong rebound in volumes given price adjustments of ~10%-14% price cut on SKUs moving from 18% to 5% GST and ~6-7% price cut on SKUs moving from 12% to 5% GST. We note that companies are likely to absorb a one-time P&L impact related to older inventory held at higher tax rates which might impact the reported numbers of 2Q26. We retain positive stance on Britannia, ITC (FMCG, Stationary), HUL (40% of sales) and Nestle (rich valuations) while JUBI remains key pick in the QSR segment.
