Jubilant FoodWorks, which is a franchisee for Domino's Pizza and Dunkin' Donuts in India, will benefit from a lower indirect tax rate; under the old regime, tax rates applied were approximately 20 percent, while the current GST bracket applied is 18 percent plus full credit for service tax paid, the analysts said. They added that the company will now be "able to take advantage of the input tax credit on rent, operating expenses, housekeeping, internet bandwidth, etc."
That, the analysts said, would be positive for all quick-service restaurant companies in general.
Indian conglomerate ITC, which has a FMCG business and is also a major seller of cigarette brands, is going to benefit from lower taxes due to the removal of dual taxation. Under the old tax regime, a value-added tax was applied on the maximum retail price that already included excise duty, the analysts said. This would allow the company to reduce prices in the range of 5 to 6 percent.
ITC shares were up nearly 6 percent in the late afternoon Singapore time.
Biscuits-maker Britannia will benefit from an overall increase in taxation on mass market biscuits, which will make its products become relatively less premium to its competitors, according to the Nomura analysts. "We foresee market share gains for Britannia in the near to medium term."
In the consumer durables space, Nomura said there'll likely be maximum shift from the unorganized to the organized space happening for companies like fans and lighting-makers Crompton and Havells. Except for fans, where indirect taxes rose to 28 percent from 26 percent, Crompton will benefit from declining rates in other categories including lighting and pumps, the note said.
Other companies including Asian Paints and malted beverage-maker GSK Consumer Healthcare face higher tax rates for their products. Nomura expects these companies to raise prices to offset the impact of increased taxation.