Shares of Indian paint companies climbed up on Monday after the GST council on Saturday lowered indirect tax slab on paints to 18 percent from the existing 28 percent.
Asian Paints gained by 5 percent at Rs 1,464.4, followed by Akzo Nobel up by 2.3 percent, while Nerolac and Berger Paints gained 1 percent and 0.3 percent respectively.
Kotak’s Rohit Chordia said that rate cut could boost the paint companies' earnings. The brokerage has raised earnings per share of Asian Paints by 7 to 13 percent for financial year 2019 to 2021.
The GST council slashed tax rates on a number of products, ranging from paints, white goods to footwears.
HM Bharuka, vice chairman and managing director of Kansai Nerolac said that it was the company's duty to pass the GST cut benefit to its customers.
"Overall EBITDA level of paint companies is very good and I don’t think we should become greedy and we should pass it on entirely to customers," he said.
(With inputs from Reuters)