GST rate cut could boost demand for consumer durables: Equirus Capital

Consumer durables may see higher demand if the goods and services tax (GST) rate is reduced from 28% to 18%, according to Hiten Mistry, Sector Lead-Consumer at Equirus Capital.

“It is poised to make consumer durables more affordable and thereby stimulate demand and enable industry growth,” Mistry said.

He explained that consumer durables can be divided into three categories - white goods such as washing machines, refrigerators and air conditioners; brown goods like small appliances and microwaves; and consumer electronics including audio and video devices. White goods, which carry higher average order values, are expected to see the strongest impact from lower GST rates.

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“I believe that 12 to 15% additional demand should come in this particular category,” Mistry said, referring to white goods.

He added that the festive season could provide a further push. “You’ll see that festive demand in the third quarter… but overall, at an annual level, 12 to 15% additional pump up will come for sure,” he noted.

While Mistry did not comment on individual stocks, he said the sector outlook is positive. “For the sector specific, I’m very bullish on the consumer durable segment,” he said.

For the full interview, watch the accompanying video

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