Which sectors and companies will benefit from 8th Pay Commission salary hike and why? Report explains

The implementation of the 8th Central Pay Commission (CPC) will not only help increase the take-home income of Central Government employees and pensioners, but it's also expected to have a larger impact on the overall markets and the economy.

The implementation of the 7th Pay Commission in 2016 led to significant changes in consumption patterns, which in turn impacted many sectors and companies thereafter. A similar impact is expected from the 8th CPC.

In a recent report, Ambit Capital, a financial services firm, said, "Based on historical trends, shifts in consumption patterns since the 7th Pay Commission along with views of our sector-analysts, we expect that sectors like motor vehicles, banks, FMCG, Quick Service Restaurants (QSR), etc. should benefit from the consumption boost when salary hikes get rolled out."

However, the magnitude of the consumption boost due to the 8th CPC will depend on the actual pay hikes, which is likely to be anywhere between 14% and 54%.

"The magnitude of the boost will depend on how big the actual salary hikes are, based on the fitment factor used and when the implementation happens. Delay in implementation could reflect as higher arrear payments, which could mean a higher one-time boost to discretionary consumption," the report said.

Which sectors and companies are likely to benefit?

As per Ambit Capital's report, the 8th CPC hikes would benefit consumer discretionary, automobiles, real estate, etc.

The report shared the following names of the sectors, companies, and the reasons why they may benefit from the 8th Pay Commission salary hikes.