GST: Could Be A Game Changing Event For India---Exide May Be One Of The Beneficiary

After a long long delay of around 15 years (after first planned by the then NDA govt in 2000 and first introduced in Parliament in the year 2007-08), there is a high probability that GST bill may be passed in our RS by today/tomorrow amid various political permutations & combinations with non-stop drama. Most probably some opposition parties will "walk out in protest against so called Lalit Modi fiasco & Vyapam Scam" paving the way for an abstain in RS voting (indirect support) & with some oppositions will likely prefer to vote in favour directly. This will make some opposition parties to be alive politically outside parliament also.

The GST is itself a game changer if implemented all over the India in the right form and as par various calculations, GST will itself add around 1.5-2% to our current GDP of around $2 trillion by FY18, because it will increase exports, domestic sales and create more employment and overall growth. GST is scheduled to be implemented wef FY16 onwards.

We now currently pay around 25-30% on an average on various goods & services which may be clubbed into a single revenue neutral GST rate of around 20% in the days ahead. Apart from one time short term benefit of reduced tax burden (which will be ultimately passed to the consumers due to competition), in the long run both manufacturers & consumers will gain because of reduced tax burden in inputs and outputs, sales will increase.

Also, due to overall higher tax revenues (about 1% of our GDP), India's fiscal deficit will improve too.

As par various analysts following sectors and scrips may benefit immensely from the implementation of GST: (Source:ET & Others)

1. Ceramic Tiles: Like Kajaria Ceramics
2. Consumer Durables: Like Bajaj Electriacls, Havells, TTK Prestige
3. FMCG/Packaged Foods: Like Britannia, Dabur, ITC, Jub Foods, Marico
4. Apparel: Page, Raymonds
5. Batteries: Exide, Amara Raja
6. Logistics: Gati, Patel Logistics 
7. Auto: Like M&M, TATA Motors
8. Cement & Steel: ACC, Tata Steel etc

But some of the stocks has already rallied for the expected event and may see profit booking once GST passage is announced (like Buy in rumour and sell after news)---so we need to check the technical of the above stocks for any further significant upside or not as ultimately time & price of a stock is the ultimate.

Exide is one of the stock, that may be benefited by GST:

Exide: 159 (CMP): Buy Around 156; It May Fly To 187-205 (Only Sustaining Above 162)

Technically, 156 is a good support zone for Exide and consecutive closing above 162, it may scale up to 187-200 in the near term.

For short term trader, SL could be placed below 153.

On the flip side, sustaining below 153, Exide could fall up to 141-130 area, where it may be further accumulated for portfolio investment purpose.

Recent Q1FY16 result was below market expectations amid lower sales in inverter/automotive/industrial battery sales and higher input costs & taxes.The company also slashed the dealer incentive and increased the dealer networks, which ultimately proved costly.

Going ahead, the company is taking necessary corrective steps for its marketing strategy and it sees better demand for automotive & industrial segment due to expected growth in 4W segment (for 7-th Pay Commission) and expected overall economic recovery in H2FY16.

Although, there is subdued demand for household inverter battery in big cities & large towns due to comparatively better power conditions (less load shedding/power cut due to lack of demand from industrial sector---currently power is in excess supply than demand in India and there is power back up system in most of the modern city housing society), in small towns and stand alone houses, inverter is still in demand due to frequent power cuts amid poor distribution networks of SEB(s).

As par BG metrics of techno funda valuation model, current median value of Exide may be around 175 and projected fair valuations are 195-215-235 (FY:16-18).

SCRIP	EPS(TTM)	BV(Act)	P/E(AVG)	LONG TERM	SHORT TERM	MEDIAN VALUE	200-DEMA	10-DEMA
EXIDEIND	6.07	47.44	31.31	174.76	170.53	172.65	160.7	153.02

EXIDEIND

7.5

51.75

31.31

194.26

189.56

191.91

160.7

153.02

EXIDEIND

8.9

56.45

31.31

211.61

206.50

209.05

160.7

153.02

EXIDEIND

10.75

61.75

31.31

232.57

226.94

229.76

160.7

153.02

Technical Charts & ET IMAGE FOR GST BENEFICIARY LIST: