How reduction in exports duty will impact white goods and durables

Reduction in exports duty

by 5paisa Research Team Last Updated: Dec 14, 2022 - 08:24 pm 9.3k Views
Listen icon

Six months after the levy's implementation, the government has reduced export duties on steel products and iron ore, with effect as of November 19. According to a late-night announcement from the finance ministry on November 18, export duties will be "nil" for certain pig iron and steel products as well as iron ore pellets. 

Additionally, export duties on lumps and fines of iron ore containing less than 58% iron will be "nil." The rate of duty will be 30% for lumps and fines of iron ore that contain more than 58% of iron content.

This might give domestic steel producers more opportunities to export their products, which might increase demand for steel and drive up domestic steel prices.

In FY22, Havells' total sales and total raw material costs, respectively, were made up of 1.6% and 2.3% of steel. Steel exposure for other durable goods companies is less than 5% of net sales.

Copper, aluminum, and derivatives of crude oil are important raw materials for manufacturers of durable goods and white goods. It is anticipated that there will be little impact on the profitability of durable companies because steel accounts for only 2–4% of net sales.

TTK Prestige's steel cookers account for 30% of its overall cooker portfolio (or 10% of sales). Domestic steel prices are predicted to rise sharply, which could have an immediate negative effect on TTK's profitability and potentially slow the rate of portfolio premiumization.

White goods and durables are expected to have strong return ratios, robust growth potential, and low penetration levels. It is anticipated that value will steadily be created as the unorganized to the organized sector transitions. Both Crompton Greaves and Havells India stand to gain.
 

How do you rate this blog?

Start Investing in 5 mins*

Rs. 20 Flat Per Order | 0% Brokerage

oda_gif_reasons_colorful

About the Author

Our research team is composed of some highly qualified research professionals, their expertise range across sectors.

Disclaimer

Investment/Trading is subject to market risk, past performance doesn’t guarantee future performance. The risk of trading/investment loss in securities markets can be substantial. Also, the above report is compiled from data available on public platforms.
Open Free Demat Account
Resend OTP
Please Enter OTP
Mobile No. belongs to

By proceeding, you agree to the T&C.

Latest Blogs
Vishwas Agri Seeds IPO Allotment Status

Quick take on the IPO of Vishwas Agri Seeds Vishwas Agri Seeds IPO, a fixed price issue of ₹ 25.80 crores, comprises entirely of 30 lakh fresh shares. Vishwas Agri Seeds IPO commenced subscription on March 21, 2024, and concludes today, March 26, 2024. Allotment for the Vishwas Agri Seeds IPO is expected to be finalized on Wednesday, March 27, 2024. Subsequently, it will list on NSE SME with a tentative listing date set for Monday, April 1, 2024.

Market Outlook for 28 March 2024

Nifty started the day on a positive note and rallied higher towards 22200 mark. However, the index was unable to surpass that level and it consolidated within a range with a positive bias to end above 22100 with gains of over half a percent.

Stock in Action - Paytm

Paytm Stock Movement of Day