From auto to agri to FMCG: Key stocks to watch after GST Council clears 2-slab tax structure

In a landmark move, the GST Council, chaired by Union Finance Minister Nirmala Sitharaman, on Wednesday approved a major overhaul of the tax structure, reducing the existing four slabs to two—5% and 18%—while introducing a higher 40% rate for luxury and sin goods.

Market analysts believe the GST 2.0 announcements will trigger a decisive, consumption-led shift in India’s growth cycle, helping cushion the economy against the impact of U.S. tariffs.

Riding on the positive sentiment, Indian equities are expected to open on a strong note today. Here are the key sectors and stocks likely to be in focus.

Auto & Auto Ancillaries

The GST 2.0 reforms are set to provide a major boost to the auto sector, with both passenger vehicles (PVs) and two-wheelers (2Ws) emerging as key beneficiaries. Now all auto components will be uniformly taxed at 18% (versus 18-28% earlier) and electric vehicles continuing at 5%.

Emkay Global expects Mahindra & Mahindra to emerge as the biggest gainer from the GST cuts, with Maruti Suzuki and Hyundai also likely to see comparable benefits.

In the two-wheeler space, Hero MotoCorp , Eicher Motors (Royal Enfield), and TVS Motor stand out as the biggest winners, with around a 10% GST cut across most of their models. Bajaj Auto also benefits, with nearly half of its portfolio seeing lower taxes, according to Emkay Global.

Under-350cc bikes will now attract 18% GST (down from 28%), while bikes above 350cc move to 40%. Despite the higher tax on premium models, Royal Enfield remains a net gainer as the bulk of its portfolio enjoys the rate cut.

Agriculture

The government has provided major relief to the agriculture and allied sector by slashing GST rates across a wide range of products in the 56th GST Council meeting.

To boost farm mechanisation, GST on tractors (below 1800cc) and their components has been slashed to 5% from 18%, while sprinklers, drip irrigation, and harvesting machinery now also attract 5% (down from 12%). Fertiliser inputs will now face 5% GST (vs 18%). In dairy, GST on milk and paneer has been scrapped, while butter and ghee rates are cut to 5% from 12%.

The move is likely to boost demand for agri-related companies such as Kaveri Seeds , Jain Irrigation Systems , Mangalam Seeds, JK Agri Genetics, Nath Bio-Genes, Dhanuka Agritech, ShreeOswal Seeds, UPL, PI Industries, and Rallis India.

Insurance

Shares of life and health insurance companies, such as HDFC Life Insurance, SBI Life Insurance, Niva Bupa, ICICI Prudential Life Insurance Company , New India Assurance Company , Star Health & Allied Insurance Company , and others will be in focus today.

The GST Council has decided to exempt the premiums for individual life insurance and health insurance policies, including family floater plans, from goods and services tax (GST). Currently, the rate applicable to health and life insurance policies is 18%.

Cement

Cement is another major beneficiary, though short-term demand elasticity remains limited; however, margins could see some improvement. Over the medium term (1–2 years), a demand revival is likely, helping absorb the upcoming capacity additions. Shares of Ultratech Cemen t, Ambuja Cement , ACC , Shree Cement , JK Cement, Dalmia Bharat, and others will be in focus today.

FMCG

Shares of FMCG majors including Nestle , HUL , ITC , Britannia, Dabur, Godrej Consumer, Marico, and others are set to benefit from the GST reforms. According to Nomura, the reduction in GST on several staples and essential items from 18% to 5% is expected to provide much-needed relief to stressed consumption.

Sin goods

Under the new GST framework, a special 40% slab has been introduced for luxury and sin goods. The move is likely to impact stocks such as Godfrey Phillips, Nazara Technologies, Delta Corp , Globus Spirits , and United Spirits .  

This category includes aerated and carbonated beverages, caffeinated and other non-alcoholic drinks, as well as high-end items such as motorcycles above 350cc, helicopters, and yachts. Besides, products such as pan masala, cigarettes, gutka, beedi, and other tobacco items will remain under the existing 28% GST slab for now. The shift to the new 40% category has been deferred until pending loans and compensation payouts are fully settled.

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