GST to improve working capital of companies; 3 stocks that could benefit

All eyes are set on the roll out of Goods and Service Tax (GST) bill during the Parliament’s monsoon session. This could prove to be a landmark bill that India much deserves. The bill, if introduced will ease the economic distortion, creating a uniform tax code across the country. The bill will especially benefit large, organised businesses in the country, wherein the movement of goods across various states becomes a lot easier. The GST structure leads to efficient decision making, for example a manufacturing company can decide to move its inventory from a slow moving market to a market where the sales are brisk, without actually worrying about the taxes at the state level. This further leads to improvement in efficiencies in the working capital structure of companies.

The GST is bound to have an enormous positive impact on the overall economy. While many companies, across various sectors in the country will benefit from the GST roll out, we are particularly bullish on companies which are in the retail side with a pan India play. Needless to say, the companies that will benefit the most would be those which have showcased balance sheet strength in term on lower leverage and positive cash flow from operations.

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