Emami, Colgate, Britannia Stocks Rally on GST Rate Cuts Boosting FMCG Prospects

Emami, Colgate-Palmolive, and Britannia Industries were among the leading consumer goods stocks that saw robust gains of up to 4% on Thursday following the GST Council’s announcement of reduced GST rates on key FMCG items. The GST Council meeting, chaired by Union Finance Minister Nirmala Sitharaman, unveiled the festival bonanza measures on Wednesday, sparking positive market sentiment.

The rate reductions are expected to drive higher FMCG volumes as companies have been relying on price hikes to protect margins in the face of rising commodity costs during recent quarters. Lower GST rates could help ease pricing pressures and stimulate consumer demand, providing relief to both manufacturers and buyers.

While urban consumption, which constitutes 50 to 60 percent of FMCG sales, has remained subdued, companies have been dependent on resilient rural demand to sustain growth. The recent GST move has raised hopes that urban consumption growth may begin to catch up with rural trends, potentially broadening the overall demand base.

The government, along with the Reserve Bank of India, has been rolling out several measures to encourage consumption. Starting with income tax cuts in February and now rationalizing indirect taxes, these steps indicate a strategic shift from prioritizing capital expenditure toward fostering consumption-led growth in the economy.