GST 2.0: Beyond blue chips – Watch these under-the-radar movers

The real opportunities may lie in overlooked companies whose balance sheets and margins are more directly influenced by the new tax regime

India’s latest GST rationalisation, effective September 22, has replaced multiple slabs with a simpler 5% to 18% structure, with a 40% demerit rate for sin and luxury goods. Analysts say this simplification could boost consumption, formalise the economy, and improve corporate earnings over the medium term. Yet while investors rushed into large FMCG, auto and cement names on Thursday, the real opportunities may lie in overlooked companies whose balance sheets and margins are more directly influenced by the new tax regime.

Overlooked and unique winners

Bidi value chain

Niche players like Sinnar Bidi Udyog, NTC Industries will see the impact of GST on tendu leaves — the key input for bidis — cut from 18% to 5%, small bidi makers get an immediate cost relief. Unlike cigarettes, which move to the 40% slab, bidis remain outside it for now. For niche listed players like Sinnar Bidi Udyog and NTC Industries, this could translate into a short-term margin lift, despite the illiquid nature of their stocks and weak profitability.

Dairy & regional snacks

Players like Parag Milk Foods, Hatsun Agro, Bikaji Foods, Prataap Snacks could benefit from reduced GST on ghee, cheese and packaged foods could benefit smaller regional players disproportionately. Tejas Khoday, Co-founder & CEO, FYERS, said: “Lower GST on dairy and plant-based foods makes nutrition affordable across income groups, but for listed companies like Parag Milk or Hatsun Agro, the change is more than sentiment — it can spur volume growth and improve affordability at the bottom end of the market, where consumption is most price-sensitive.”

Stationery and education supplies
A cut in the GST on notebooks, pencils and art materials directly benefits school suppliers. Small caps like DOMS and Navneet may not grab headlines, but these shifts can influence their order books and state tenders.

Salons and wellness
While salons don’t make it into investor decks, adjacencies under organised players like Kaya Ltd, VLCC Healthcare could gain from cheaper consumables and rising wellness demand. Ranjit Jha, CEO of Rurash Financials, noted: “Salons operate on wafer-thin margins. Even small relief on soaps, oils and disposables matters. When combined with GST exemptions on health insurance, it creates space for households to spend more on wellness services — a category investors rarely track.”

Rural equipment and pumps
VST Tillers, Shakti Pumps, Escorts Kubota are likely to benefit from GST relief on tractors, irrigation tools and farm pumps makes rural capex more affordable, supporting niche equipment makers alongside the larger tractor OEMs.

Logistics
Ajjay Bagga, veteran analyst, says that the harmonisation of GST rates for rail and road transport removes earlier disparities (rail at 12% versus road at 5%/12%). So, under the new regime, both can opt for either 5% without ITC or 18% with ITC. This levels the playing field and could encourage a shift towards rail freight, benefitting integrated logistics operators. Therefore, industry experts highlight names like  Concor, Gateway Distriparks to watch out for.

Renewables adjacencies — KP Energy, Inox Wind
The steep hike in GST on coal from 5% to 18% makes renewable power relatively more competitive. For EPC contractors and wind turbine makers, the cost equation improves over time, tilting project economics in their favour.

Insurance & healthcare
“Exempting GST on health and life insurance premiums is a strong policy push that can lift penetration in under-served segments,” Bagga observed. Along with cuts on life-saving drugs and medical devices (down to 5% or nil), is expected to make coverage and treatment more affordable. Large insurers such as HDFC Life and SBI Life, as well as hospitals and device makers like Apollo Hospitals, Max Healthcare and Poly Medicure, stand to gain from better penetration and affordability.

Misunderstood — where the market narrative is wrong

Cement vs real estate
The street celebrated the 28% to 18% cut in GST on cement but the real gainer could be real estate developers, not the cement producers themselves. Independent analyst Ambareesh Baliga said: “Cement companies may not see big margin gains — the real gain is for developers. They previously absorbed the GST hit; now they keep the saving. Our calculation shows roughly Rs 30 per sq ft of benefit in affordable projects, which the market hasn’t fully priced.”

Ashutosh Murarka from Choice Equity explained: “Investors often see Nuvoco’s under-leverage as a weakness. In cyclical sectors like cement, it’s actually an advantage — it provides headroom to scale when demand picks up and improves ROCE as utilisation rises. At the same time, shifts in input tax credits on coal and steel can reprice integrated players faster than the market expects.”

Refunds and working capital — textiles, pharma and healthcare
GST refunds have long been a liquidity trap for companies with inverted duty structures. Rohit Beri, CEO & CIO, Arthalpha, said: “Companies with reverse input-credit situations will benefit a lot because it reduces their working capital cost. Timely refunds are a big efficiency gain, especially in textiles and healthcare where refund pain was significant.”

Autos — not just small cars
Beri added that GST relief extends beyond the headline. “Sub-4m cars and <350cc two-wheelers are clear winners. But even luxury cars gain because cess rationalisation has brought effective taxes down. The only negative is for premium bikes above 350cc, which lose relative affordability.”

Clear negatives to track

Varun Beverages — carbonated and flavoured drinks fall into the 40% slab, adding margin pressure.

Premium apparel — the benefit is capped at apparel under ₹2,500, leaving high-end festive wear out of favour.

Premium 2W (>350cc) — Royal Enfield’s 650cc models, Bajaj’s Triumph and KTM lines, and Hero’s Harley tie-up face affordability headwinds.

Why this matters for stock pickers

The GST reset creates two investible themes. First, margin relief where input costs fall immediately — dairy, diagnostics, renewables equipment. Second, working-capital relief where refund fixes release liquidity — textiles, pharma, select healthcare. For mid and small caps that had been underperforming, this offers a potential re-rating trigger.

Vipul Bhowar, Senior Director, Waterfield Advisors, said: “We expect GST cuts to support GDP growth over the next four to six quarters. The Centre’s estimated net revenue loss of around Rs 48,000 crore is modest compared to the demand boost. Insurance, FMCG and healthcare are clear beneficiaries; buoyancy will determine the fiscal offsets.”