Britannia, Dabur, ITC, Parag Milk Rally After GST Rate Cuts On Biscuits, Paneer, Soap, And Shampoo

The Nifty FMCG index was the second-highest gainer among sectoral indices on Thursday, rising over 1.2%. Household names, including Britannia, Dabur, ITC, Nestle, and Colgate-Palmolive, were trading above 1% after India cleared tax rate revisions for the sector.

The GST Council on Wednesday approved a tax restructuring that simplifies the rates to just two slabs: 5% and 18%. The revised rates will come into effect from September 22.

For the fast-moving consumer goods sector, this results in rate cuts across various segments, including hair oil, toothpaste, and soap.

GST Cut Across Key Consumer Items

As part of the GST rate rationalization, household essentials such as soap, toothpaste, toothbrushes, hair oil, shaving cream, and coffee will now be taxed at 5%, down from 12% or 18%.

Meanwhile, items such as milk, paneer, and Indian breads like roti and paratha will be exempt from GST, with the rate reduced from 5%. Butter, ghee, cheese, and dairy spreads will now be taxed at 5%, down from 12%.

The GST Council has imposed a 40% tax on all tobacco products, including pan masala, cigarettes, and bidis, along with aerated water, caffeinated drinks, and carbonated beverages.

Stocks Watch

Biscuit company Britannia was the top gainer on the Nifty FMCG index, rising 4.4% to ₹6,169. GST on biscuits has been reduced to 5%.

Emami, which manufactures skin and hair care products, climbed 4.08% higher, while dental care products manufacturer Colgate-Palmolive rose 3.6% to ₹2,467.5.

Nestle India (+2.5%), Dabur (+1.7%), Hindustan Unilever (+0.96%), ITC (+1.54%), and Marico (+0.34%) were the other gainers on the FMCG index.

Dairy stocks also gained, with Dodla Dairy trading 1.34% higher at ₹1,454 and Parag Milk Foods rising 1.42% to ₹ 248.50.

Analyst Take 

SEBI-registered analyst Finkhoz said that the Nifty FMCG index is attempting a breakout above 57,900 resistance, and a sustained move over this level can trigger an upside towards 60,000–62,000, while strong support rests at 53,800. The GST rate revisions have stimulated demand ahead of the upcoming Diwali festive season. They identified FMCG players with a wide daily essentials portfolio (HUL, Dabur, Nestle, Britannia, Patanjali Foods, Marico) as the biggest winners on the government's ‘volume booster’ for the sector.

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