Jun 19, 2017

Granite Stocks can do good in GST regime

GST rate is higher for Granite companies than what was earlier.

"The GST Council has announced a tax of 28 per cent on granite polished slabs, which was earlier 14.5 per cent," the association said.


Earlier, I have suggested Divyashakti Granite at Rs 126.55 on Sept 1, 2016, which gained till Rs 176.95 on Oct 6, 2016. Gain of 39% in little over a month.
Granite stock Divyashakti Granite is sitting at Rs 111 now after demonetization and higher GST rate. 

I see higher tax rate are paid by most Granite companies than what is proposed in GST. Granite is a state subject and that could be the reason. After GST, hope state tax won't be more. In this case, Granite companies are unnecessarily pressuring govt for lowering the tax.

Current price of Rs 111 of Divyashakti Granite is very comfortable and safe price for any downside risk. I had earlier liked this company that is why I talked about this company otherwise other granite companies which are already paying taxes are going to benefit like Divyashakti.

N Umashree and N Sai Venkateshwara Prasad combined has bought 3.4% shares in June, 2017. Both are from promoter group.

Divyashakti export most of its output. Stronger Rupee can hurt it. But to export, it import raw granite too.
Due to GST, 50% output is cut in May and June as said in above financial Express article (link shared). In this case, June Quarter result may not be that good.

Divyashakti is not a high liquidity stock. So, you need to check for that according to your portfolio strength. Buy in small quantity.