GST 2.0: A Game-Changer For Retail, Footwear, And Mid-Premium Apparel Sectors — Read Motilal Oswal's Report

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Motilal Oswal Report

The GST rate on apparel priced between Rs 1,000 and Rs 2,500 has been reduced from 12% to 5%, while apparel priced above Rs 2,500 has seen GST rate increase from 12% to 18%. The GST rate on apparel priced below Rs 1,000 remains unchanged at 5%. The GST rate on footwear priced up to Rs 2,500 has been reduced to 5% from 12% for footwear priced below Rs 1,000 and from 18% for footwear priced above Rs 2,500.

We believe the shift in the government’s stance toward consumption-led growth through recent reform measures, such as income tax cuts and the GST rationalization, should boost consumption and bode well for organized retailers.

We believe footwear retailers such as Bata, Campus, Relaxo and Metro Brands are the biggest beneficiaries of the GST rate rationalization.

In the apparel pack, we believe this is positive for mid-premium brands such as Westside (Trent), Pantaloons (Aditya Birla Fashion and Retail), etc., whereas it could be negative for premium and ethnic retailers such as Vedant Fashions, Raymond, and Shoppers Stop.

A broad-based pick-up in consumption also bodes well for the likes of DMart and Reliance Retail.

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