Logistics Stocks Gain On Hopes Of Early Passage Of GST Bill

Shares of logistics companies such as Snowman Logistics, Gati, Aegis Logistics, VRL Logistics, Allcargo Logistics, Gateway Distriparks and Blue Dart outperformed today on hopes of passage of GST Bill in Rajya Sabha in the upcoming monsoon session of Parliament.

Snowman Logistics was the top gainer from this pack with the stock rallying as much as 7.2 per cent to hit intraday high of Rs 75.80. Gati Ltd, Aegis Logistics, VRL Logistics and Gateway Distriparks gained between 2.5 per cent and 5 per cent.

The GST or goods and services tax – which creates a single national sales tax to replace a matrix of unwieldy and complicated levies by the states and central government – is stuck in the Rajya Sabha. Logistics companies will be among the biggest beneficiary of the GST implementation as it will facilitate the seamless movement of goods across the country.

Industry experts say that if the GST Bill is passed, then businesses will consider steps to improve their supply chain efficiency by consolidating warehouses and setting up larger facilities. This will present a big opportunity for the logistics sector.

Finance Minister Arun Jaitley recently said a constitution amendment bill on the new indirect tax regime will be brought in the Rajya Sabha in the monsoon session.

Hopes of the passage of the GST Bill have been boosted after West Bengal Chief Minister Mamata Banerjee earlier this week said the state government is supporting new tax regime.

Market analysts are also optimistic. Mukul Kochhar, head of institutional sales (India) at Investec Capital Services, says, “The government is managing floor in the Parliament extremely well now. The last Parliament session was the most productive in 10-15 years and that gives hope that the next session will be equally productive with GST getting passed through.”

As of 12:18 p.m., shares of logistics companies were outperforming the Nifty which was up 0.5 per cent.