GST cuts may offer only short-term support to demand, says Nirmal Bang CEO

Rahul Arora, CEO of Nirmal Bang Equities, believes the proposed GST cuts could lift demand, but the impact may not be sustained. “There’s a lot of talk about deferred purchases once those GST cuts effectively come in. But my sense is that even if it comes in, I don’t know how much of it will be structural in nature.” He noted that the timing around the festive season may give a temporary boost, especially in durables and autos.Arora believes consumer durables and automobiles are better ways to benefit from goods and services tax (GST) rationalisation compared to fast moving consumer goods (FMCG).

“Even without the GST numbers, we’re expecting 15–20% growth in most of these companies over the next two to three years,” he said, pointing to names like V Guard, Crompton, Havells, and Blue Star. On automobiles, he added that two-wheeler companies are showing steady growth, with exports and EV adoption improving.

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In autos, Arora said, “If you look at Mahindra and Mahindra (M&M), the tractor numbers are still growing at 8-10%, the rest of the portfolio is growing about 10-11%. Even if you look at a Hero Motocorp or a TVS Motor Company, they’re still managing to grow 8–10% without the electric vehicle (EV) kicker.” He highlighted M&M and Eicher Motors as preferred plays.In the banking sector, Arora pointed out valuation and credit growth challenges. He said large private banks are trading at higher price-to-book multiples than before, while loan growth remains weak. However, he sees value in SBI, City Union Bank, and housing finance names like HUDCO and Home First.

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For the full interview, watch the accompanying video

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