V-Mart to pass on entire 7% GST rate hike

News: According to The Economic Times , VMart Retail is likely to pass on the full 7% GST rate hike on apparel, which will be effective from January 1, 2022.

Views: For fresh stocks , the company has already indicated the hike in price to its vendors and manufacturers. For existing stocks, the company would not face a problem if the government allows it to change the MRP. However, if the government does not allow the change in the MRP tag of the existing stocks then the company will reduce the discounts on products to mitigate the cost impact. Though increase in pricing can negatively impact volume growth in the short-term , the price hike and lower discounting will cushion the margins.

Impact: Neutral