Amber Enterprises, Trent among key winners of GST-driven demand upswing

India’s retail sector is poised for a consumption-led revival as the GST Council’s recent decision to rationalize tax slabs promises to lower prices across a wide spectrum of goods. Effective September 22, the new structure simplifies the system into two primary slabs—5% and 18%—while retaining a 40% rate for sin and luxury items.

The most significant impact is expected in categories such as apparel, footwear, consumer electronics, and daily essentials. Apparel priced between ₹1,000 and ₹2,500 now attracts just 5% tax instead of 12%, boosting affordability in the mid-premium segment, while footwear up to ₹2,500 also sees a steep reduction to 5%.

Consumer electronics, including air conditioners and televisions, move to 18% from 28%, while a wide basket of essentials has been lowered to ~5% or even nil in certain cases. The mandatory pass-through of rate cuts to consumers is likely to drive a broad-based reduction in retail prices.

These shifts could be particularly supportive of mass and mid-premium demand. Organized players in apparel and footwear are expected to gain competitiveness against unorganized peers, reversing the drag seen when GST on footwear was earlier raised to 12%.

Consumer electronics may experience near-term purchase delays as shoppers await the new rates, but festive season demand is projected to accelerate post-implementation. Daily essentials, meanwhile, stand to benefit from both volume uptick and a tilt toward branded consumption.

That said, challenges remain. The persistence of inverted duty structures—in which input materials attract higher GST rates than finished goods—has long strained working capital and margins for retailers.

Inputs such as synthetic leather, rubber soles, adhesives, and man-made fibers continue to be taxed at 12–18%, creating a mismatch that eats into competitiveness. The government has acknowledged the issue, but clarity on corrective measures is still awaited.

The broader policy shift signals a clear push toward consumption-driven growth, reinforced by recent tax cuts and GST reform. With rationalized rates reducing end-prices, organized retail is positioned to capture stronger demand in the mass and mid-premium segments.

Over the medium term, this reset could mark a structural boost for the sector, widening the formal market’s share and deepening consumer engagement across categories.

Amber Enterprises – TP: 9000

Amber Enterprises is continuously increasing the share of components in RACs, adding new clients across AC and consumer durables, and expanding wallet share with existing customers, which supports sustainable growth in the consumer durables division.

The GST 2.0 reforms, finalized by the Council, have reduced the rate on RACs from 28% to 18%, materially improving affordability and set to drive a sharp rebound in RAC demand, benefitting Amber as a key supplier to AC manufacturers.

Further, with ongoing capex, acquisitions in niche electronics, and diversification across new electronics segments, the company is well-positioned to capture demand acceleration from GST-driven consumption tailwinds. We expect revenue/EBITDA/PAT to deliver a CAGR of 24%/32%/54% over FY25–28.

Trent – TP: 6400

TRENT’s growth momentum is supported by strong cost controls and disciplined execution, which continue to deliver healthy operating performance.

The GST 2.0 reforms, which have reduced rates on apparel in the ₹1,000–₹2,500 price band from 12% to 5%, are expected to materially improve affordability and drive stronger demand across Trent’s key formats, particularly Zudio.

We remain positive on Trent given its robust footprint expansion, a long runway for growth in Star (presence in just 10 cities), and the scaling up of emerging categories such as Beauty, Innerwear, Footwear, and LGDs.

We expect revenue/EBITDA/PAT to deliver a CAGR of 20%/18%/17% over FY25–28E, aided by GST-driven consumption tailwinds and aggressive store expansion.

(The author is Head – Research, Wealth Management, Motilal Oswal Financial Services Ltd)

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