FMCG, consumer discretionary set for festive boost; defence remains a long-term play: Sushant Bhansali
Remove Ads
To start with, it is the PM's GST bonanza that has given a positive cheer to the market. The GST cuts are expected to spark around $13 billion in consumption, providing a strong tailwind to the FMCG sector. The move ahead of the festive season is crucial and is likely to translate into stronger volumes, better consumption, and overall positive sentiment. What is your take on the FMCG sector, considering its sideways action over the last two to three years?
What specific themes within consumption do you expect to perform well, including areas previously underperforming?
Considering the GST announcement is not yet official, should investors enter the market now or wait?
You are positive on consumer discretionary, staples, auto, apparel, agrochemicals, and consumer durables. But what about defence and shipbuilding, considering the government's focus, including the mission Sudarshan Chakra to develop indigenous aerial defence systems by 2035?
Sushant Bhansali, Ambit Asset Management, says despite short-term challenges, the FMCG and consumer discretionary sectors stand to benefit from upcoming GST cuts , especially rural-focused companies. While short-term flows into defence may be limited due to government finances, the long-term growth story remains intact. Market entry is favorable now, supported by festive season demand and improving consumption sentiment.Post-COVID, rural recovery was slower compared to urban markets, which were already performing well. Over the last two to three years, FMCG growth was primarily urban-driven, but rural penetration is now improving. Combined with the expected GST cuts around Diwali, this should accelerate recovery. The underperformance of the past two to three years could translate into stronger returns over the next 6–18 months.It's a two-pronged approach. First, rural-focused players with strong distribution networks are likely to do well in H2 of this year. Second, consumer discretionary segments, currently taxed at 28% GST, could benefit if rates drop to 18% as widely speculated. These areas should provide additional growth levers.It is a good entry point. Investors may stagger investments slightly, but waiting will not yield results. Large-caps and mid-caps are at reasonable levels for a 1–2 year horizon, and for those with a 3+ year horizon, any time is suitable. Recent global uncertainties have provided attractive entry points. With lower interest rates, tax cuts, and GST implementation ahead of Diwali and the wedding season, markets could see an upbeat turnaround and reach new highs.Defence remains a strong long-term bet, but short-term flows may be constrained. Government finances are under pressure, with slower direct tax growth and GST rate adjustments affecting indirect taxes. Consequently, short-term capex and investments in this sector may be limited. The long-term story, however, remains intact, and sideways movement could continue until better entry points emerge.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
&w=3840&q=100)
Business Standard
25 minutes ago
- Business Standard
Real-money gaming dealt a losing hand as crackdown follows ₹20,000 cr blow
Mounting social concerns and an estimated ₹20,000 crore loss by nearly 450 million people due to frauds in real-money gaming (RMG) have pushed the Centre to impose a blanket ban on the sector. The decision comes amid alarm over opaque algorithms, user addiction, and widespread financial distress linked to games such as rummy, poker, and fantasy sports. The ban not only ends the long-standing debate over whether skill-based or chance-based games can operate in India but also overrides the patchwork of state-level rules on regulating or prohibiting the sector. Experts and industry players warn that the move could backfire by driving users towards unregulated offshore betting platforms. 'Government needs to reconsider and take a more calibrated stance, as prohibition has never worked. This Bill will bring back the satta market with a vengeance. Blanket bans drive users to unregulated platforms rather than protecting them. Instead of reducing harm, prohibitions create black markets that are harder to regulate and far riskier for users,' said Abhay Raj Mishra, president and national convenor of Public Response Against Helplessness & Action for Addressal (PRAHAR). PRAHAR's July 2024 survey of 2,500 gamers in Telangana, where RMG has been banned for eight years, found more than 94 per cent of players still accessing offshore or illicit apps through virtual private networks, Telegram groups, or sideloaded platforms. Industry executives also flagged the dominance of offshore operators, who already control nearly 80 per cent of the RMG market and run operations from tax havens such as Malta, Curaçao, and the British Virgin Islands. 'We continued to absorb high tax costs to keep users engaged. But if costs are passed on, users will simply migrate to untaxed offshore platforms,' said one senior executive. The ban comes even as the sector was reeling under a 28 per cent goods and services tax (GST) imposed in October 2023. More than 400 companies employ 200,000 people in the sector, estimates show. Major players include Dream11, Games24x7, Junglee Games, MPL, Zupee, Gameskraft, Head Digital Works, and Nazara Technologies. The decision has jolted the industry, which until recently was preparing for the impact of a steeper tax rate on margins. 'What has surprised the industry is that the Bill has been tabled without any consultation. We were not aware of this Bill until Tuesday,' said another senior executive. Founders and executives told Business Standard they were questioning the Centre's intent behind a blanket prohibition, especially after years of contributing through taxes, compliances, and outreach. They pointed out that the move came just days after rumours of a higher 40 per cent goods and services tax (GST) slab, categorising gaming as a 'sin' commodity — something they had already deemed unsustainable. 'Why was there revised GST chatter when the sector was supposed to be killed?' asked the founder of an RMG company. A joint report by the US-India Strategic Partnership Forum, the Interactive Entertainment & Innovation Council, and WinZO said the Indian exchequer loses $2.5 billion annually in tax revenues due to user migration to offshore companies. 'From an economic perspective, the prohibition is likely to hurt an industry that contributes heavily to GST collections and employment, while simultaneously driving users to offshore, unregulated platforms,' said Navod Prasannan, partner, King Stubb & Kasiva, Advocates & Attorneys. Between 2022 and 2024, the Ministry of Electronics and Information Technology issued blocking directions to 692 gambling and betting websites and apps. 'We acknowledge the government's decision to ban RMG and respect that this step has been taken after careful consideration of the social and regulatory concerns associated with the sector. As responsible stakeholders, we recognise the government's priority to safeguard consumer interests, prevent harm, and ensure that innovation aligns with national well-being,' said Shweta Rajpal Kohli, president and chief executive officer (CEO), Startup Policy Forum. Casual games level up? The Bill proposes recognition for e-sports where games do not involve wagering and rely on factors such as mental agility or strategic thinking. Currently, categories such as casual, midcore, or AAA-rated games depend on advertising or in-app purchases for revenue. A void in the RMG space may steer users towards e-sports, with the sector welcoming the Centre's decision. 'I welcome the Centre's decision to prohibit RMG and establish a strong regulatory framework. Too many young lives were being lost to addiction and debt. This decisive step safeguards our youth while unlocking the future of Indian gaming, driven by original intellectual property (IP), creativity, and Make in India games,' said Vishal Gondal, cofounder of nCore Games. Ecosystem participants added that the move is expected to drive stronger IP development in the country. 'We applaud this decision, as it allows us to focus on the real concerns as a business — monetisation, retention, and most importantly, building great IP for India and the world, rather than having to explain to our audiences what we are to begin with,' said Sumit Batheja, CEO and cofounder of Ginger Games.
Time of India
an hour ago
- Time of India
As many as 45 cr people lose about Rs 20,000 cr annually from real-money gaming: Govt sources
NEW DELHI: Much against the arguments spelt out by gaming companies against the ban on real-money gaming, Govt estimates that around 45 crore people lose close to Rs 20,000 crore every year in online real-money gaming, according to data provided by an official source on Wednesday. Tired of too many ads? go ad free now The source said the govt believes that online real-money gaming is turning into a 'major problem for the society', and thus it decided to opt for revenue loss in preference to people's welfare. "There is a rough estimate that 45 crore people lose money every year. The total impact of the loss is estimated to be tentatively around Rs 20,000 crore," the source said, just as the Govt tabled the "Promotion and Regulation of Online Gaming Bill 2025" in the Lok Sabha. The Bill, which was passed by the Lok Sabha, proposes to promote eSports and online social gaming while banning money gaming in any form. "Online gaming involving money has become a major problem for society. Every Parliamentarian has raised concerns about its ill effects. Between revenue from one-third of the industry segment and society welfare, the govt has chosen welfare of society," the source said. According to the source, actions against entities involved in money gaming under the bill will be mainly taken by state govts. The bill proposes that any person offering an online money gaming service in violation of the stipulated provisions will face imprisonment of up to three years or a fine that may extend to Rs 1 crore or both. The provisions also stipulate imprisonment of up to two years and or a fine of up to Rs 50 lakh, or both, for those indulging in advertisements in contravention of rules. Several online real-money gaming platforms 'masquerade as game of skills" entities to differentiate themselves from gambling or betting, the source said. Tired of too many ads? go ad free now "Those who play the games are victims. They will not be punished as per the bill, but there will be action on those who provide real-money gaming platforms, facilitate transaction services, etc," the source said. On the other hand, the bill seeks to promote eSports and online social games, which are a part of the creative economy. "There will be a budget for it, schemes and authority for their promotion. They are two-thirds of the industry. It will create job opportunities for the online gaming industry," the source said. Govt has been making efforts for the last three-and-a-half years, which were being bypassed by the real-money gaming players, the source added. 'The govt tried to check it through GST, but it was being bypassed. There was a proposal for a regulatory body, but it was impacted by a conflict of interest. The provisions under the bill were taken after several complaints were received from the public and their representatives," the source said.
New Indian Express
an hour ago
- New Indian Express
Zero tax on life and health insurance likely in new GST regime
Most states have agreed to a zero tax on individual health and life insurance premiums— currently taxed at 18%—under the proposed Goods and Services Tax (GST) reform agenda, Bihar Deputy Chief Minister Samrat Choudhary said after a meeting of the Group of Ministers (GoM) on insurance. Choudhary, who heads the 13-member GoM, said the panel will submit its detailed report to the GST Council by October for deliberation. While the GoM broadly favours a full exemption for individual health and life insurance policies, some states have flagged revenue loss concerns that could shape the final outcome at the GST Council's October meeting. A complete exemption would also deprive insurers of input tax credits on operational costs, which could result in higher premiums or reduced agent commissions.
