GST Rate Cut Fuels Rally: Gopal Snacks, Bikaji Foods, and Prataap Snacks Soar Up to 6%

Introduction: GST Rate Revision Ignites Snack Stocks

Shares of Gopal Snacks Ltd., Bikaji Foods Ltd., and Prataap Snacks Ltd. saw a significant rally on Tuesday, with gains ranging between 4-6%. This surge followed the GST Council’s announcement on Monday, revising the GST rate on extruded namkeen snacks from 18% to 12%. The market responded positively, reflecting investor confidence in the potential boost to profitability for these snack manufacturers.

GST Rate Revision: Leveling the Playing Field

The GST Council’s decision to reduce the tax rate on extruded snacks aligns it with other savoury snacks such as fruit & vegetable chips, bhuijas, and various snack foods, which already enjoy a lower rate of 12%. This revision is seen as a move to create a level playing field within the snacking industry, making extruded snacks more competitively priced and accessible to a broader consumer base.

Impact on Key Players: Gopal Snacks, Bikaji Foods, and Prataap Snacks

Gopal Snacks, a market leader in rings and extruded snacks, experienced a 6% surge in its share price, reaching an intraday high of Rs 354.50 per share on the NSE. With a strong foothold in the Rs 5, Rs 10, and Rs 15 price segments, Gopal Snacks is well-positioned to capitalize on this tax cut. Notably, extruded snacks contributed 58% of the company’s revenue in FY24, making this GST rate cut a significant positive for the company’s bottom line.

Prataap Snacks, known for its extensive product portfolio and wide distribution network, also benefited from the rate reduction. Headquartered in Rajkot, Prataap Snacks has a significant presence in 11 states and 2 Union Territories, with a strong market position in Gujarat. Its shares rose by 4% on Tuesday, reflecting the market’s optimistic outlook on the impact of the GST revision.

Strategic Edge: Gopal Snacks’ Dominance in the Extruded Category

Gopal Snacks’ leadership in the extruded snacks category is underscored by its diverse product range, including Rings, Kurves, Puff, Stix, Chulbule, and Pellets. The company’s strategic focus on the Western savoury snacks market, where it ranks among the top five, positions it well to benefit from the revised GST rate. The company’s emphasis on smaller, affordable pack sizes makes it a staple in the Indian snacking landscape, catering to price-sensitive consumers across the country.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.