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Jewellery stocks surge 6-10% as govt sets 3% rate on gold | ina000003197

The GST Council on Saturday announced that the rate on gold and gold jewellery would be at 3 percent. Having said that, the import duty of 10 percent stays, which will be over and above the 3 percent.
At 9:17 am, Titan Company was quoting at Rs 514.15, up Rs 41.90, or 8.87 percent on the BSE. It touched a 52-week high of Rs 524.00. Meanwhile, PC Jeweller was quoting at Rs 535.00, up Rs 31.95, or 6.35 percent on the BSE.Bonaz Capital

Tribhovandas Bhimji Zaveri, on the other hand, was quoting at Rs 98.00, up Rs 5.05, or 5.43 percent on the BSE.

The GST Council on Saturday announced that the rate on gold and gold jewellery would be at 3 percent. Having said that, the import duty of 10 percent stays, which will be over and above the 3 percent.Bonaz Capital

“The government’s decision to apply 3 percent GST on gold is an encouraging step in the current context to stabilise the industry and address the concerns of the millions employed in the industry,” Somasundaram PR, Managing Director, World Gold Council India told news agency PTI.INA000003197
However, he said, with 10 percent duty the total tax on gold is still high and will continue to have an impact on the jewellery industry.
With the GST rates announced in the earlier meetings showing better than expected trends, jewellery stocks had started showing an upward trajectory, anticipating lower rates.
Brokerages such as CLSA have already upgraded major stocks such as Titan. It upgraded the firm to buy from outperform earlier over the weekend and raised its 12-month target price to Rs 620 from Rs 555 earlier as the goods & services tax (GST) rate was lower than expectations which remove an overhang from the stock.
Months of speculation and suspense is finally over as the GST rates on gold and diamond jewellery have been finalised at 3 percent. “Titan currently pays an over 2 percent effective tax rate, so this is only a marginal increase but the outcome is much better than expectations of as much as 6 percent,” said the CLSA report.
Other than Titan, Gitanjali Gems, PC Jeweller, and Tribhovandas Bhimji Zaveri could see positive movements. Gitanjali Gems gained over 3 percent in the past three days in the run up to the Council’s meet, while PC Jeweller was up 1 percent, but TBZ was down about a percent.