GST Rate Rejig: Which FMCG, Footwear Stocks Will Benefit The Most? Check Goldman Sachs' Picks

As the GST Council prepares to meet on Sept. 3–4 in New Delhi, the spotlight is on a bold proposal to slash tax rates across consumer categories.

The Centre’s push for a simplified two-rate GST structure, 5% and 18%, is expected to dominate the 56th GST Council meeting this week. If approved, the overhaul will phase out the 12% and 28% slabs, making daily-use items significantly cheaper and offering a major boost to companies in the FMCG and footwear sectors, said Goldman Sachs.

As per the brokerage, among the key sectors to watch out for is FMCG, in particular instant noodles, juices and Ayurvedic products, which currently attract a GST rate of 12%. A reduction in rate for these products is expected to benefit companies like Nestlé, Emami and Dabur.

The brokerage noted another scenario in which GST on all packaged food products comes down to 5%; then the major categories to benefit will be biscuits, packaged water, malt beverages, chocolates and ice creams. This will also be positive for companies like Britannia, Varun Beverages and Tata Consumers.

A third case scenario as per the brokerage assumes daily use FMCG products coming down from a GST of 18% to a GST of 5%; in a situation like this, the major categories to benefit will be soap, detergent, biscuits, shampoo, toothpaste, hair oil, packaged water, malt beverages, chocolates and ice creams. This will be positive for companies like HUL, Britannia, GCPL, Marico, Nestle, Varun Beverages and Tata Consumers, in addition to Emami and Dabur.

Goldman Sachs has also highlighted expected changes for the footwear companies from the proposed GST rate rationalisation ahead of the GST Council’s meeting this week.

“If the GST on ready-made garments and footwear priced up to Rs 2,500 is reduced to 5%, it will be a significant positive for Bata and Metro Brands,” the brokerage noted. Bata, for instance, has 60% of its sales below the Rs 2,500 mark, which currently attracts 18% GST.

Apparel players like Trent and Page Industries will also gain, though to a lesser extent. “Around 70–75% of their sales are already under the Rs 1,000 price point, which is taxed at 5% and will remain unchanged.”

Goldman Sachs said. However, the remaining 25–30% of their portfolio, currently taxed at 12%, could see a drop to 5%, improving margins and competitiveness.

The report also highlighted broader implications for the sector. “Lower GST rates will improve consumer purchasing power and narrow the price gap between branded and unbranded goods,” it said. “This could accelerate volume-led growth and make organised players more competitive against the tax-evading unorganised sector.”