Logistics stocks rally up to 7% as July 1 GST implementation looks likely

gst - logistic stocks

Shares of logistics companies soared up to 7 per cent in Tuesday’s trade after Economic affairs secretary Shaktikanta Das said that GST will be implemented by July 1 this year.

Following the development, shares of GatiBSE 1.82 % shot up 6.82 per cent to hit a high of Rs 131.60 on BSE. Snowman Logistics soared 6.74 per cent to Rs 61. Alcargo Logistics advanced 5.36 per cent to Rs 174. Sical LogisticsBSE 0.75 %, VRL Logistics and Blue DartBSE 0.02 % gained up to 3 per cent.

Logistics sector is seen as the biggest beneficiary of the GST implementation. The logistics sector is largely fragmented and tax avoidance by unorganised players creates cost gap between organised and unorganised players.

This cost competitiveness is seen reducing after the GST implementation.

GST would ease bottlenecks in logistics, especially the time spent at check posts for administering local taxes.

Brokerages believe that with GST implementation, warehouse size will increase significantly and operations will be more automated, necessitating bringing in the organised logistics companies to manage the supply chain.

 

The Economic Times, 28 February 2017

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