2 days ago
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Stocks to Buy: Brokerage firm Motilal Oswal Financial Services has said that the recent Goods and Services Tax (GST) reforms, announced by the government on September 3, could act as a strong catalyst for reviving domestic consumption and supporting India's economic growth amid persistent global headwinds.
In a research note, the brokerage highlighted that the reforms mark the first major structural policy move of the government's current term and reflect a clear focus on stimulating the domestic economy.
“The GST measures are likely to have economy-wide benefits, lifting consumer sentiment and driving demand across several sectors,” Motilal Oswal stated. “This could, in turn, trigger a cycle of positive momentum in equity markets.”
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Reforms Likely to Support Economic and Market Momentum
The brokerage noted that the current market valuations—trading at 20.8 times forward earnings, slightly above the long-term average of 20.7 times—remain reasonable, with further expansion possible. Motilal Oswal expects double-digit profit growth of 10 per cent for the Nifty 50, which could support continued market strength.
The firm also pointed out that household consumption, credit growth, and investment activity could see an uptick in the second half of FY26 as a result of the tax changes, particularly due to higher disposable income and improved consumer confidence.
Stocks to benefit from GST reforms
Motilal Oswal identified a broad set of sectors and companies expected to benefit from the GST rationalisation, which includes lower rates on consumer goods, simplification of the tax structure, and greater compliance clarity.
Automobiles
Companies expected to gain from improved rural and urban demand:
Maruti Suzuki, Hyundai Motor India, Mahindra & Mahindra, Bajaj Auto, Hero MotoCorp, Ashok Leyland, VECV
Auto parts manufacturers: Motherson Sumi Wiring India, Happy Forgings, Endurance Technologies, Bosch
Banks
Expected to benefit from higher credit demand:
ICICI Bank, HDFC Bank, IDFC First Bank
Consumer Durables
Havells, Voltas, Blue Star
Electronic Manufacturing Services (EMS)
Amber Enterprises India, a key AC component supplier
Consumer Staples
ITC may benefit from GST being applied to MRP instead of transaction value, depending on further clarity
Other expected beneficiaries: Britannia, Nestle India, Dabur, Varun Beverages, Marico, Hindustan Unilever (HUL), Emami
Fertilisers
Coromandel International, due to a reduction in GST on raw materials from 18 per cent to 5 per cent
Hotels
Lemon Tree Hotels, Indian Hotels Company
Insurance
Niva Bupa, Star Health, ICICI Lombard, HDFC Life, SBI Life, ICICI Prudential Life, Max Financial, LIC
Logistics
Delhivery, driven by anticipated growth in shipments of consumer durables and electronics
Man-Made Fibres
Grasim Industries
NBFCs and Vehicle Financiers
Bajaj Finance, HDB Financial
Mahindra Finance, Cholamandalam Investment, Shriram Finance
Oil & Gas Distribution
Indraprastha Gas, Mahanagar Gas, Gujarat Gas
Retail and Quick Commerce
Quick commerce: Eternal, Swiggy
Retail chains: Trent (Westside), Pantaloons, Aditya Birla Lifestyle Brands, Go Fashion, Relaxo, Bata, Campus, Metro Brands, Reliance Retail, Electronics Mart India, Aditya Vision, DMart
Renewable Energy
Acme Solar, JSW Energy, Suzlon, Waaree Energies, Premier Energy
Outlook
Motilal Oswal concluded that the GST reforms are well-timed and could serve as a key lever to reinvigorate domestic demand at a time when global macroeconomic conditions remain uncertain.
“The policy shift lays the groundwork for a consumption-led recovery. With fiscal stability and structural clarity, the Indian economy and equity markets could be entering a more constructive phase,” the note said.
While the firm maintains a cautiously optimistic outlook, it also flagged the need for further implementation clarity, particularly around specific tax components and their final impact on pricing and margins.
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