Stocks impacted by proposed GST changes on sin goods, insurance

The Group of Ministers (GoM) has proposed significant GST rate changes across 148 items, including tobacco, aerated beverages, health insurance, and garments.

Ahead of the 55th GST Council meeting set to take place in Jaisalmer on December 21, the Group of Ministers (GoM) has proposed significant GST rate changes across 148 items, including tobacco, aerated beverages, health insurance, and garments.

The proposed hike in GST for demerit or sin goods such as aerated beverages, cigarettes, and tobacco-related products has impacted several stocks tied to these industries.

Meanwhile, insurance stocks saw positive movement amid expectations of tax cuts on insurance premiums. GoM proposed a series of measures to ease the GST burden on the sector. The GoM recommended reducing the GST on health insurance premiums from 18 percent to 5 percent, as well as exempting GST on premiums for senior citizens. Additionally, they proposed a GST exemption for health insurance premiums of non-senior citizens up to Rs 5 lakh per annum. Furthermore, the GoM suggested exempting GST on pure term life insurance premiums.

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GST rates on wristwatches priced above Rs 25,000 and shoes costing over Rs 15,000 per pair are proposed to increase from the current 18 percent to 28 percent.

Here's a look at the stocks responding to these developments:

• ITC: As one of India's largest cigarette manufacturers, ITC may face increased costs and potential shifts in demand if higher GST rates are implemented. However, its diversified FMCG and hotel businesses could help mitigate the impact. In Q2FY25, ITC's cigarette net revenue rose 7 percent YoY to Rs 8,177 crore. At 11.50 AM, ITC shares were down 1.7 percent at Rs 469.
• Godfrey Phillips: The maker of Four Square cigarettes saw its shares decline by over 1 percent to Rs 5,694 as the market reacted to the news of potential tax hikes. Food, beverages, and tobacco products accounted for 67.6 percent of the company's total turnover in FY24.
• VST Industries: Shares of the Charminar cigarette manufacturer dipped nearly 2 percent in early trade before stabilizing in the afternoon. For the fiscal year ending March 31, 2024, cigarette sales increased to Rs 1,391.9 crore, up from Rs 1,341.7 crore in the previous year.
• Varun Beverages: The second-largest franchisee of PepsiCo saw its shares drop 2% to Rs 620 in the afternoon. Despite challenges from excessive rainfall in India, the company's consolidated revenue rose over 24 percent on year in Q3CY24 to Rs 4,804.7.  Also Read | Niva Bupa, Star Health shares rise up to 11% amid likely GST reduction on health insurance premia
• Niva Bupa Health Insurance Company: The newly listed insurer, saw its shares rise 10 percent to Rs 82. The company was listed on the NSE on November 14 at Rs 78. A joint venture between the Bupa Group and Fettle Tone, Niva Bupa has been operating in the Indian health insurance sector since 2008.
• Star Health & Allied Insurance: The shares rose nearly 4 percent to Rs 484 after a streak of negative monthly returns from September to November. The company reported its Q2 earnings on October 30, with net profit declining over 11 percent to Rs 111.3 crore.
• Ethos: Shares of the luxury and premium watch retailer dropped nearly 2 percent to Rs 3,222. Ethos exclusively retails brands like Carl F. Bucherer, Raymond Weil, Oris SA, Corum, Parmigiani, Urwerk, Bovet, Arnold & Sons, Girard-Perregaux, and H. Moser & Cie in the Indian market. In Q2FY25, the company reported a 26 percent year-on-year rise in revenue to Rs 297 crore, while PAT grew 14 percent to Rs 21.2 crore.