Channel controls indicate that leading players move early to protect the shelf space, smooth up stock transitions and capture Trade Mindshare during the party season.
After a long -term piece of modest demand, the GST section is seen as a catalyst for consumption revival. With large categories that migrate to the 5% GST plate, companies set up price strategies to ensure that the benefits reach consumers directly.
The trade margins are expected to remain intact, while system efficiency will probably improve as the leaks decrease. The move is also seen as accelerating the shift from unorganized to brand players by limiting the price differences and to relax the compliance tax.
A dual strategy comes up in the sector in the sector: in advance trade schedules to encourage pre-transmission and clear communication of revised MRPS-effective Na-September 22 September.
Companies actively liquidate old inventory through targeted offers, so that the risk of stock building is minimized. It is important that the availability of the input tax credit (ITC) on pre-GST shares is guaranteed, reducing the risk of trading disturbance. However, some distributors remain careful, with reference to limitations of working capital and restraint to binding funds for the transition. In categories where low unit packs dominate, grammars are expected, to be changes required post-gst. Larger packages, especially in personal care, food and household categories, are witnesses of direct discounts.
Retailers confirm that these proactive measures promote confidence, with the expectations of faster purchase of the consumer as soon as price reductions go to end users.
GRT 2.0 in broad out lines consider electricity hers in the industry as a structurally positive. In addition to stock management in the short term, the tax reduction is expected to cause continuing consumables, strengthen trade relationships and stimulate market share profits for organized players.
The festive season offers a timely background, with early kous and attractive arrangements that position FMCG companies to record an incremental question.
In short, the sector enters the transition with greater readiness than with previous tax reforms. Although the execution risks exist in the short term, GST 2.0 is ready to reset the consumption landscape, which strengthens the growth output for FMCG players in the medium term.
HUL: Buy | Target RS 3050 | LTP RS 2558 | Forward 19%
Hindustan Unilever (HUVR) remains a structurally strong game in the FMCG sector of India, supported by the deep distribution, robust brand portfolio and focus on volume-guided growth.
Recent initiatives under the Aspire strategy-superior brands, innovation and engagement of digital first engagement translations in improving the underlying volume growth (4% in 1QFY26).
Rural Recovery (~ 1/3rd of income) and Premium Portfolio extension are important structural drivers, while digital-first acquisitions such as minimalist and Oziva improve exposure to rapidly adjacent adjacent boundaries.
GST reduction on personal care (18%→ 5%) and packaged foods (18%→ 5) has been set to improve the growth of the category and demand of the consumer. With macro -tailwinds of lower inflation, supporting policy measures and benign raw materials, operational performance is set to strengthen. We model an income/EBITDA/APAT CAGR of 7%/7%/8%compared to FY25-28E.
(The author is Head – Research, Wealth Management, Motilal Oswal Financial Services LTD)
((Indemnification: Recommendations, suggestions, views and opinions of experts are their own. These do not represent the views of economic times)
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