Budget expectations - FMCG Sector

EXPECTATIONS -

1. Hike in Service Tax from 12 to 14%

2. Hike in Excise duty from 12 to 14%.

3. Excise duty  on Cigarettes  remain same or increase marginally

4. Increase in personal income tax exemption limits – higher disposable incomes resulting in impetus to overall demand.

IMPACT -

1. Neutral : Higher prices may impact consumption for very short time but eventually neutralize.

2.Negative: It will increase the cost of manufactured goods. Negative for companies like HUL, Asian Paints, Godrej Consumer Products, Colgate etc.

3. Neutral for companies like ITC, Godfrey Phillips.

4. Positive: For all FMCG companies as it will boost volumes.