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Britannia Industries rises 4% after GST rates fixed for biscuits

After detailed discussions on taxation of biscuits, the GST Council finally decided on a GST rate of 18 percent on all categories of biscuits on June 3.

June 05, 2017 / 11:14 AM IST
Britannia Industries  | In the last four years, the stock has risen 106 percent to Rs 3405.90, as on November 3. The company's trailing 12-month (TTM) EPS was at Rs 74.36 per share. EPS in FY17 for the stock stood at Rs 36.85.

Britannia Industries  | In the last four years, the stock has risen 106 percent to Rs 3405.90, as on November 3. The company's trailing 12-month (TTM) EPS was at Rs 74.36 per share. EPS in FY17 for the stock stood at Rs 36.85.

 
 
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Britannia Industries shares gained nearly 4 percent intraday Monday after GST rates on biscuits are fixed by the GST Council.

After detailed discussions on taxation of biscuits, the GST Council finally decided on a GST rate of 18 percent on all categories of biscuits on June 3.

"GST rate is tax neutral if you look at the current rate. So it is not going to impact us either way, positively or negatively. It is a very fair move from the government," Varun Berry, MD of Britannia Industries said in an interview with CNBC-TV18.

However, Harpreet Singh, Partner, Indirect Tax at KPMG India said this was little surprising, as like footwear and textiles, this industry was also expecting two rates i.e. a lower rate for cheaper biscuits used by the 'aam aadmi' and a residual higher rate for costly cookies meant for the elite class.

He feels this GST rate definitely appears to be on the higher side. Also, with cutthroat competition in this industry and thin margins, it is likely that the impact of rate increase is passed on to the consumer, according to him.

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Therefore, eat all your cookies before July 1 or change your taste buds and shift to other confectioneries, Singh advised.

The biscuit manufacturer expects June month to be very tight month as dealers are expected to de-stock.

“If GST gets implemented smoothly then hopefully this is going to have a fairly good impact on growth in the fast moving consumer goods (FMCG) industry as a whole”, Berry said.

He looks forward to a solid economy and a solid growth for companies like Britannia in next three-six months.

At 10:54 hours IST, the stock price was quoting at Rs 3,652.00, up Rs 76.75, or 2.15 percent on the BSE.

Posted by Sunil Shankar Matkar
first published: Jun 5, 2017 11:14 am

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