The Goods and Services Tax (GST) on items such as air conditioners, televisions above 32 inches, monitors, and dishwashers has been reduced from 28% to 18%, effective immediately. The move is expected to boost retail demand, especially during the upcoming festive season, providing a tailwind for consumer finance companies.
Bajaj Finance, a leader in consumer durable financing through zero-cost EMIs, stands to benefit significantly. A lower effective purchase price of electronic goods makes equated monthly installments (EMIs) more affordable, potentially driving higher loan disbursals and expanding its customer base.
Analysts at Jefferies noted that the GST cut on air conditioners and large-screen televisions could help boost volumes and clear channel inventory. They expect it to act as a demand catalyst for the overall consumer durables segment.
Jefferies added that the GST cut is particularly impactful for categories like air conditioners, where summer demand was disrupted and retailers are holding significant unsold stock. While the impact on dishwashers is expected to be limited due to their small share of total industry sales, the broader effect on consumer sentiment and purchase intent is expected to be positive.
For Bajaj Finserv, the parent company with interests in lending, insurance, and asset management, this surge in durable goods demand could also translate into increased cross-selling opportunities, particularly in protection and extended warranty products.Also read: Is your stock portfolio ready for GST 2.0? Council meeting may rewrite market playbook
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