GST reforms very timely; adding more M&M, ancillaries like Uno Minda, cement stocks to portfolio: Gurmeet Chadha

The government’s latest GST rationalisation has been welcomed as a timely reform that could boost demand, improve compliance, and revive the market sentiment, according to Gurmeet Chadha, Managing Partner and Chief Investment Officer, Complete Circle Consultants.

Speaking to ET Now, Chadha said the quick decision-making showed a sense of urgency and sent a positive signal to businesses. “Similar items will no longer face different tax rates, anomalies like bread and pizza have been corrected, and the inverted duty structure has been addressed. This will mean fewer disputes, more compliance, and a stronger tax system,” he noted.

Chadha also mentioned that reducing GST on essentials and medicines, which form nearly 20% of the CPI basket, will help bring down inflation, boost consumption, and support growth. “This reform will negate some of the tariff impact and, importantly, revive sentiment which had turned very negative,” he said.

Auto sector a big winner?

Chadha called the changes “largely positive” for automakers. While larger passenger vehicles now fall under the 40% slab, he said the impact was not negative, given that effective taxes earlier touched as high as 50%.

Two-wheelers, tractors, and small commercial vehicles stand to gain the most. “Almost 60% of M&M’s portfolio benefits, while two-wheeler makers like TVS and Ola Electric, and auto component players such as Uno Minda and Lumax are already seeing stock price gains,” he said. Maruti Suzuki, which has been flat for years, may also benefit from new launches, he added.

FMCG and financials also benefit

Apart from autos, Chadha highlighted that FMCG firms will gain from the steep GST cut on essentials (from 18% to 5%). He also expects banks and NBFCs to benefit as higher consumer savings and spending translate into stronger credit growth and investments.

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“The entire Bank Nifty is available at about 17–18 times earnings, below its 10-year median. Financials are still undervalued and will be major beneficiaries as economic activity picks up,” he said.

Investment strategy

Chadha said his firm is adding more M&M, two-wheeler ancillary stocks like Uno Minda, and cement players to its portfolio. He also sees scope for deploying 40–50% of fresh funds in the next few days, with the balance invested gradually over the next few weeks.

“With festive demand, lower inflation, and GST reforms, this is a good time to put money to work in the market,” he said.