“Systematic Investment Plan”Repo Rate: 6.75% CRR: 4.00% of NDTL SLR unchanged at 21.50% Liquidity: 0.25% of NDTL under overnight repo and 0.75% of NDTL under 7 and 14 day term

A monthly investment update Issue: October, 2016 Vol : 39

KNOWLEDGE POWER . WEALTH ENHANCER

For private circulation only

15.2 lakh crores by July 2016. Mid and small cap valuations are on the higher side and excessive in some pockets. These are likely to correct. There is valuation comfort in large caps.

These big bang reforms in the bond market have the potential to un-leash profound consequences: beneficial effects for investors, corporates and the economy at large.

The investment choices before investors are widening

Thanking you,

Best Regards,Krishnan Ramachandran ,CEO

earn save invest

SHAM’S SUGGESTS

Amount is invested on monthly basisPassive and automated

No need to time the marketIts flexible - Create/Update/-cancel SIP anytime

“Systematic Investment Plan”

Dear Investor,On the back of inflation data and the slowing growth rate, the Reserve Bank of India (RBI) cut the repo rate by 0.25 per cent on Tuesday, while keeping the Cash Reserve Ratio (CRR) unchange.-From 6.5 per cent, the repo rate stands at 6.25 per cent now.

India, according to Mckinsey is likely to grow at 7.7% during 2016 to 2020, the fastest growing econo-my in the world till 2020.

The domestic mutual fund industry is steadily gaining traction. A healthy trend is the steady growth in SIPs. Presently there are 1.06 crore equity SIPs mobilizing Rs 3000 crores every month. Total AUM of the industry touched

Bene�ts of SIP

RBI, yesterday, delivered its first monetary policy decision under governor Patel and newly-formed India’s 6-member Monetary Policy Committee (MPC). The formation of MPC has been a landmark institutional reform and in today’s meeting, all the members unani-mously voted for a rate cut.

The Reserve Bank’s repo rate cut of 25 bps today was balanced by a rather less dovish statement on future inflation trajectory. The highlights of today’s monetary policy was the change in stance on the timeframe to reach the 4% inflation target (March 2018 earlier) and the desired range for real rate. While the self-imposed glide path to 5% by Q4 2016-17 has been retained, the journey thereafter seems to be mired with known and unknown upside risks to headline retail inflation. The central bank avoided any mentioning of the GST impact on inflation as the final details of the new tax regime are yet to be carved out. The desired range for real rates (3m/1 year T-bill rate minus inflation expectation) has been allowed to dip to 125bps

from earlier 150-200bps as the central bank opined that neutral rate is dynamic and trending downwards globally.

We expect inflation to fall to 4% by November before it starts to pick-up again in last quarter. For FY17 as a whole, the CPI inflation is likely to average around 5%. Thus, the sole focus on inflation gives very limited headroom for further rate cuts. That said, with shifting of the 4% goal posts and removing the rigidity in real rates, the central bank has kept the options open for itself to deliver more rate cuts in case the global and domestic growth situations warrant.

With regards to liquidity, the central bank re-iterated its commitment to maintain the neutrality of banking system liquidity and hence, lead us to expect Rs. 400-500 billion worth of OMO over the next 3-4 months. Comfortable liquidity and muted credit demand should keep the bond market supported.Please find attached the Compari-son of RBI Bi-monthly Monetary Policy Statement (MPS)

INTERVIEW EXCERPTS ARTICLE SBI Funds Management Private Limited

COMPARISON OF RBI BI-MONTHLY MONETARY POLICY STATEMENT (MPS)


Repo Rate: 6.75%

CRR: 4.00% of NDTL

SLR unchanged at 21.50%

Liquidity: 0.25% of NDTL under overnight repo and 0.75% of NDTL under 7 and 14 day term Repo

Daily variable rate repos and reverse repo to s m o o t h liquidity

Summary: Key rates were left u n c h a n g e d . F o r w a r d g u i d a n c e accommodative conditional on inflation data and reform m e a s u r e s undertaken in budget

E c o n o m i c activity has lost momentum in Q3 2015-16, pulled down by slack in agriculture and i n d u s t r i a l sector. Service s e c t o r p e r f o r m a n c e has been mixed.

While deficien-cy in north-east m o n s o o n affects the current Rabi production and hence farm i n c o m e ; weakness in e x t e r n a l d e m a n d , under-utilized i n d u s t r i a l capacity and c o r p o r a t e balance sheet adjustments are leading to low investment bythe private sector.

Growth in H2 2015-16 delivered mixed performance.

Agriculture, construc-tion activity and production of capital goods and consumer non-durable goods weakened.

On the other hand, mining, electricity generation, commer-cial real estate, and service sector activity expanded.

For 2016-17, demand can gradually strengthen on anticipation of normal monsoon which helps to improve rural income, Pay commis-sion and OROP related consumption stimulus and effects of monetary easing. Persistent corporate sector stress and risk aversion in banking system are some risksto growth.

Growth in 2 0 1 5 - 1 6 d e l i v e r e d m i x e d performance.

Weakness in rural consump-tion, export orders and p r i v a t e i n v e s t m e n t pulleddown the production in r e l a t e d manufacturing sectors.

A g r i c u l t u r e and construc-tion activity weakened as well.

On the other hand, mining, e l e c t r i c i t y g e n e r a ti o n , c o m m e r c i a l real estate, and service sector activity expanded.

E c o n o m i c activity has improved in the last few months.

Kharif sowing h a s strengthened on the back of pick-up in monsoon thuss u g g e s ti n g h i g h e r a g r i c u l t u r e growth and rural demand in FY18.

I n d u s t r i a l a c ti v i t y i m p r o v e d owing to higher mining and manufacturing p r o d u c ti o n . Nonetheless, capital good p r o d u c ti o n r e m a i n s s l u g g i s h suggestingc o n ti n u e d weakness in i n v e s t m e n t demand.

I n c r e a s e d optimism on domestic growth on the back of i m p r o v e d a g r i c u l t u r a l prospects, pick- up in construc-tion projects by government and, acceleration in service sector activities.

7th Pay commis-sion is likely to boost consump-tion demand.

The risks are seen in external trade demand and the manufac-turing sector output.

Outlook: Higher a g r i c u l t u r e growth, disburse-ment of 7th pay c o m m i s s i o n award, and policy i n i ti a ti v e s t o w a r d s i n f r a s t r u c t u r e activities augurs

Repo Rate: 6.50%

Narrow policy rate corridor from +/- 100bps to +/- 50bps. Thus MSF rate cut by 75bps to 7.00% reverse repo rate increased by25bps to 6.00%.

CRR: 4.00% of NDTL. Reduced min daily CRR from 95% to 90% of CRR rate effective Apr 16.

SLR at 21.25% effective since 2nd April (SLR reduction calendar has been announced).

Liquidity: Progres-sively lower ex- ante liquidity deficit from 1% of NDTL to near neutrality

Summary: Cut in Repo rate along with narrowing of the policy rate corridor. Guidance to bring the system to liquid neutral.

Repo Rate: 6.50%

CRR: 4.00% of NDTL

SLR: 21.25%

L i q u i d i t y : Progressively lower ex-ante liquidity deficit from 1% of NDTL to near neutrality

Summary: No change in key rates and policy stance from April m o n e t a r y policy.

Repo Rate: 6.50%

CRR: 4.00% of NDTL

SLR: 21.25%

L i q u i d i t y : Progressively lower ex-ante liquidity deficit from 1% of NDTL to near neutrality

Summary: No change in key rates and policy stance from April m o n e t a r y policy.

Repo Rate: 6.25%CRR: 4.00% of NDTLSLR: 20.75%

L i q u i d i t y : P r o g r e s s i v e l y lower ex-ante liquidity deficit from 1% of NDTL to near-neutrality

All 6 members voted for rate cutSummary: Cut in Policy rate by 25bps.

•

• •

•

•

•

•

•

•

• •

•

•

•

•

•

•

•

•

•

•

•

• • • • •

• •

•

•

•

• •

•

•

• •

•

•

•

•

•

•

Action Points

RealSector

Comparison of RBI Bi-monthly Monetary Policy Statement (MPS)

Date

6th Bi-Monthly MPS2015-16

2nd Feb 2016

1st Bi-Monthly MPS2016-17

5th Apr 2016

2nd Bi-Monthly MPS2016-17

7th Jun 2016

3rd Bi-Monthly MPS2016-17

9th Aug 2016


4th Oct 2016

Bottomline: RBI, today, delivered a 25bps cut in Repo rate taking the policy rate to 6.25%, while market was divided in its view. The pressure on food inflation has eased considerably in recent months, providing comfort to the central bank to achieve its 5% target of Q4 2016-17. Additionally, fragile global growth was another strong reason, which prompted the central bank into its today’s move.


For 2016-17, demand can g r a d u a l l y strengthen on back of improving real income of h o u s e h o l d s , improvement in c o r p o r a t e profitability and expectations of n o r m a l monsoon after two successive years of deficiency.

Outlook: RBI sees downside risks to its 7.4% g r o w t h estimate for 2 0 1 5 - 1 6 . Growth is projected to i m p r o v e marginally to 7.6% in 2016-17

commercial real estate, and service sector activity expanded.

For 2016-17, demand can gradually strength-en on anticipation of normal monsoon which helps to improve rural income, Pay commission and OROP related c o n s u m p ti o n stimulus and effects of monetary easing. Persistent corporate sector stress and risk aversion in banking system are some risksto growth.

Outlook: Growth is projected to clock 7.6% in 2016-17 with risks being evenly balanced.

production in r e l a t e d manufacturing sectors.

Agriculture and const ruction a c ti v i t y weakened as well.

On the other hand, mining, e l e c t r i c i t y g e n e r a ti o n , c o m m e r c i a l real estate, and service sector a c ti v i t y expanded.

Currently, high f r e q u e n c y i n d i c a t o r s point to fi r m i n g recovery since the start of the year.

For year as a w h o l e , d o m e s ti c conditions for growth are improving led by better prospects for consumption demand and higher public sector capital expenditure. Global factors and subdued appetite for fresh private i n v e s t m e n t s are risk to future growth.

O u t l o o k : Growth is projected to clock7.6% in 2016-17 with risks being e v e n l y balanced.

a g r i c u l t u r e growth and rural demand in FY18.

I n d u s t r i a l a c ti v i t y i m p r o v e d owing to higher mining and manufac-t u r i n g p r o d u c ti o n . Nonetheless, capital good p r o d u c ti o n r e m a i n s s l u g g i s h suggestingc o n ti n u e d weakness in i n v e s t m e n t demand.

S e r v i c e s sector is witnessing a g r a d u a l broad-based improvement.

O u t l o o k : H i g h e r a g r i c u l t u r e g r o w t h , disbursement of 7th pay commissionaward, and falling lending rates augurs well forconsumption d e m a n d ; while reforms b y government should boost b u s i n e s s sentiment and e v e n t u a l l y investment . 2 0 1 6 - 1 7 g r o w t h projection is retained at 7.6% with risks being e v e n l y balanced.

7th Pay commis-sion is likely to boost consump-tion demand.

The risks are seen in external trade demand and the manufactur ing sector output.

Outlook: Higher a g r i c u l t u r e growth, disburse-ment of 7th pay c o m m i s s i o n award, and policy initiativest o w a r d s i n f r a s t r u c t u r e activities augurs well for overall growth. 2016-17 g r o w t h projection is retained at 7.6% with risks being evenly balanced.

•

•

•

•

•

•

•

• •

•

•

•

•

•

•

RealSector


Date


2nd Feb 2016


5th Apr 2016


7th Jun 2016


9th Aug 2016


4th Oct 2016

Bottomline: The latest monetary policy statement reflected optimism on domestic growth. While RBI remains circumspect of global growth and domestic manufacturing activity, it grows more confident on the domestic growth conditions owing to better prospects for agriculture and hence the consumption demand. Government’s focus in infrastructure spending, and likely pick-up in consumption lays down the template to improve the business confidence and eventually investment. Overall, the GVA growth forecast of 7.6% for FY17 has been retained.

INTERVIEW EXCERPTS ARTICLE

CPI inflation increased for fifth consecu-tive month partly due to unfavourable base and in part due to structur-al demand s u p p l y mismatch (as in case of pulses and services).

Looking into details suggests decline in goods inflation but p e r s i s t e n t stickiness in s e r v i c e s inflation.

Despite the i n c r e a s e , overall inflation is still under desirable limits. Active food supply manage-ment, policy response and global price m o v e m e n t s have helped.

O u t l o o k : Inflation has evolved closely along the RBI’s trajectory andshould meet RBI’starget of 6% for Jan2016. Going f o r w a r d , inflation is expected at5% by end 2016-17 helped by expectations of normal m o n s o o n , contained oil prices and exchange rates

CPI inflation dropped sharply in February owing to sharp contraction in price of vegetables, d o w n w a r d correction in pulses prices and easing of fuel inflation.

Core inflation, on the other hand, edged up, suggest-ing capacity constraint in the sector.

For 2016-17, domestic food production shortag-es in recent past, potential rise in global commodity prices and demand stimulus from Pay c o m m i s s i o n i m p l e m e n t a ti o n posts upside risks to inflation. This can be offset by fiscal c o n s o l i d a ti o n , active food supply management by government and weak global demand.

Outlook: Inflation has evolved closely along the RBI’s desired trajectory. Going forward, inflation is expected to average around 5% in 2016-17 with risks being slightly tilted on upside.

As per the latest data available, CPI inflation rose in April after three consecu-tive months of moderation.

H i g h e r inflation print was led by more than seasonal jump in food prices and upward movements in prices of petrol and diesel.

This was partly offset by lower inflation in fire-woods and LPG (in the fuel category). Prices in rest of the category (services and core inflation) r e m a i n e d sticky around their earlier levels.

Outlook: Going forward, CPI is expected to a v e r a g e around 5% in 2016-17 with risks being slightly tilted on upside.

Inflation has w o r s e n e d since the last m o n e t a r y policy in June. The latest CPI print stands at 5.8% driven primarily by higher food prices.

Fuel inflation r e m a i n e d subdued.

S o ft e r i n fl a ti o n readings were also recorded a c r o s s s e r v i c e s constituents in health, education and o t h e r categories of h o u s e h o l d consumption.

Outlook: Risks related to food inflation could be reversed by strengthening of monsoon and the Kharif s o w i n g p a tt e r n . H o w e v e r , likelihood of improvement in consump-tion demand, the 7PC implementa-tion, and uncertainty in g l o b a l c o m m o d i t y prices pose upside risks to n o n - f o o d inflation.

Latest Inflation print (5.05% in August) depicted c o n s i d e r a b l e softening in prices. Food prices corrected sharply and fuel i n fl a ti o n r e m a i n e d subdued.

CPI ex food and fuel, however, has remained sticky around 5% mainly due to rigidity of prices in education, medical and personal services category.

While the cost of inputs for the manufactur ing sector has marginally risen, it has not been transmitted into higher output prices as the c a p a c i t y utilization levels remain low.

O u t l o o k : Improved food supply in 2016-17 is likely to lead to disinflation in foodprices and will be a major contribu-tor to lower headline inflation prints in the near-term. 5% i n fl a ti o n projection for Q4 FY17 has been retained with risks being tilted towards the upside.

•

•

•

•

•

•

• •

•

•

• •

•

•

•

•

•

•

•

Price


Date


2nd Feb 2016


5th Apr 2016


7th Jun 2016


9th Aug 2016


4th Oct 2016

Bottomline: There was a considerable change in RBI’s view on inflation vis-s-vis the last meeting in August. The central bank growing increasingly comfortable on inflation trajectory, at least up until March 2017.


L i q u i d i t y c o n d i ti o n s tightened in December and January with advance tax o u tf l o w s , c u r t a i l e d g o v e r n m e n t s p e n d i n g ( v i s - a - v i s r e v e n u e collection)and s e a s o n a l pick-up in c u r r e n c y demand and credit.

To mitigate t h e s e conditions, the central bank increased the availability of liquidity under LAF and variable rate term repo.

Average daily l i q u i d i t y i n j e c ti o n increased from Rs. 1200 billion in December to Rs 1,345 billion in January.

This helped w e i g h t e d average call money rate to r e m a i n a n c h o r e d around the repo rate.

Liquidity conditions tightened since m i d - D e c e m b e r owing to cash building of central g o v e r n m e n t , unusually high and persistent demand for currency and c r e d i t - d e p o s i t mismatch.

To mitigate these conditions, the central bank increased the availability of liquidity under LAFand variable rate term repo.

Average daily liquidity injection increased from Rs. 1,345 billion in January to Rs 1,935 billion in March.

Going ahead, RBI has committed itself to aggressively ease the liquidity deficit in the system and progressively bring it to liquidity neutral system.

L i q u i d i t y c o n d i ti o n s i m p r o v e d marginally but still remained tight during most part of April and May owing to s t r o n g c u r r e n c y demand and elevated levels of central g o v e r n m e n t cash balances with the RBI.

To mitigate t h e s e conditions and bring the liquidity to neutral mode, the central bank conduct-ed Rs. 700bn of OMO purchas-es between April and May apart from the availability of liquidity under LAF and variable rate term repo.

Average daily l i q u i d i t y i n j e c ti o n declined from Rs1,935 billion inMarch to Rs.1,030bn duringApril-May.

Going ahead, RBI has c o m m i tt e d itself to a g g r e s s i v e l y ease the liquidity deficit in the system and progres-sively bring it to liquidity n e u t r a l system.

L i q u i d i t y c o n d i ti o n s e a s e d s ignificant ly during June and July due to increased government spending and R s . 8 0 5 b n worth OMOpurchases this financial year which more than offset the s t r o n g c u r r e n c y demand.

Average daily l i q u i d i t y o p e r a ti o n switched from net liquidity injection of Rs. 370bn in June to net absorption of Rs. 141bn in July and Rs.405bn in August (tillAugust 8th).

R e fl e c ti n g easy liquidity c o n d i ti o n s , the money market rates have declined.

Going ahead, RBI has c o m m i tt e d itself to aggressively ease the l i q u i d i t y deficit in the system and progressively bring it to

L i q u i d i t y c o n d i ti o n s r e m a i n e d comfortable in Q3, with RBI a b s o r b i n g liquidity on a net basis

OMO purchases worth Rs.200 billion were conductedsince last policy meet.

Reflecting easy l i q u i d i t y conditions, the money market rates have declined.

RBI has retained its stance on liquidity manage-ment and keeping the system liquidity close to neutral levels.

•

•

•

•

•

•

•

•

•

•

•

•

•

•

•

•

•

•

•

•

Liquidity


Date


2nd Feb 2016


5th Apr 2016


7th Jun 2016


9th Aug 2016


4th Oct 2016

Bottomline: The RBI has already conducted OMOs of Rs. 1,050bn between April-September. As a result, interest rates on CDs and CPs have eased considerably. The governor re-iterated its commitment to maintain the liquidity in the neutral mode.


India’s exports have been declining for 13 months in s u c c e s s i o n , although there are indications of sequential bottoming out. Imports on the other hand are g r a d u a l l y picking up leading to a m a r g i n a l widening of trade deficit.

Nevertheless, the overall currentaccount deficit is fairly contained and easily financed through robust FDI and NRI deposit inflows.

Looking ahead, the persistent fall in oil prices could adverselyimpact the r e m i tt a n c e inflow from gulfregion. Global volatilityalso poses risks to FII inflows.

In FY16 YTD, the country has achieved an overall BoP surplus leading to FX reserves accretion of US$ 5.9bn YTD.

India’s exports and imports in value terms have been declining for 15 c o n s e c u ti v e months, although the extent of decline has significantly reduced.

In fact, both exports and have improved in volume terms and non-oil imports have strengthened. In net, trade deficit has narrowed and CAD has been contained (latest data as of Q3

FY16 and easily financed throughFDI.

E x p o r t s declined for17th consecu-tive month in value terms in spite of m o d e s t increase in volumes led by i n c r e a s e o u t b o u n d shipments of g e m s , j e w e l l e r y , pharmaceuti-cals, chemicals and electronic goods.

Imports on the other hand, fell sharplyand across c o n s ti t u e n t s leading to c o n ti n u e d narrowing of trade deficit in value terms.

P o r tf o l i o i n fl o w s improved.

In net, i m p r o v i n g trade deficit in c o n j u n c ti o n with higher FII inflows led to a marginal build- up in FX reserves.

Merchandise e x p o r t s growth moved into positive territory after e i g h t e e n months and the pick-up was broad based.

In the imports segment, Oil import bill was low due to f a v o u r a b l e prices and gold import fell due to low d e m a n d .

Non-oil non gold import also shrank thus leading to an overall narrowing of trade deficit in Q1 2016.

On the capital account front, while the FDI r e c e i p t s slowed since the start of FY17, the FII inflows have b e e n p a r ti c u l a r l y robust.

Overall FX reserves have built-up to US$ 366bn by August 5,2016.

M e r c h a n d i s e exports growth declined in the first two months of Q2 as the global growth remains extreme-ly muted.

Imports have depicted an even sharper contrac-tion due to low demand in gold and non-oil non gold segment.

While the overall trade deficit remainsc o m f o r t a b l e , data indicates fall in growth of services exports and decline in i n w a r d remittances are falling, which needs monitor-ing.

On the capital account front, while the FDI receipts slowed since the start of FY17, the FII inflows have been particularly robust.

Overall FX reserves have built-up to US$ 372bn by September, 2016.

•

•

•

•

•

•

•

•

•

•

•

•

•

•

•

•

•

•

•

•

•

BoP


Date


2nd Feb 2016


5th Apr 2016


7th Jun 2016


9th Aug 2016


4th Oct 2016

Bottomline

RBI,on 4th october 2016 delivered its first monetary policy decision under governor Patel and newly-formed India’s 6-member Monetary Policy Committee (MPC). The formation of MPC has been a landmark institutional reform and in today’s meeting, all the members unanimously voted for a rate cut.

The Reserve Bank’s repo rate cut of 25 bps today was balanced by a rather less dovish statement on future inflation trajector y. The highlights of today’s monetary policy was the change in stance on the timeframe to reach the 4% inflation target (March 2018 earlier) and the desired range for real rate. While the self-imposed glide path to 5% by Q4 2016-17 has been retained, the journey thereafter seems to be mired with known and unknown upside risks to headline retail inflation. The central bank avoided any mentioning of the GST impact on inflation as the final details of the new tax regime are yet to b e carved out. The desired range for real rates (3m/1 year T-bill rate minus inflation expectation) has been allowed to dip to 125bps from earlier 150-200bps as the central bank opined that neutral rate is dynamic and trending downwards globally.

We expect inflation to fall to 4% by November before it starts to pick-up again in last quarter. For FY17 as a whole, the CPI inflation is likely to average around 5%. Thus, the sole focus on inflation gives very limited headroom for further rate cuts. That said, with shifting of the 4% g oal posts and removing the rigidity in real rates, the central bank has kept the options open for itself to deliver more rate cuts in case the global and domestic growth situations warrant.

With regards to liquidity, the central bank re-iterated its commitment to maintain the neutrality of banking system liquidity and hence, lead us to expect Rs. 400-500 billion worth of OMO over the next 3-4 months. Comfortable liquidity and muted credit demand should keep the bond market supported.

•

INTERVIEW EXCERPTSINVESTMENT IDEAS

Poised to gain disproportionate-ly from herbal waveDabur, a 132 years old brand, has been the pioneer in Ayurveda based health & personal care products in India. Dabur has a strong portfolio of powerful brands including Real, Dabur Chyawanprash with the focus primarily on ANH offerings. We believe that Dabur is set to gain from the emerging preference for ANH products. Notably, the promotion of herbal products (contributes ~85% to domestic sales of Dabur) by several of its peers will help in expanding the market.

Bouquet of powerful brandsCurrently, Dabur has 16 brands with a turnover of over Rs1bn, and three brands with turnover of

more than Rs10bn. Importantly, to enhance brand presence, Dabur spends about 13-16% of its sales on ads every year. Dabur’s diverse product portfolio (health supplements, hair care, home care etc) & presence in niche categories has resulted in sales CAGR of robust ~16% over FY11-16. Further, we expect revenue to grow at a CAGR of ~9% over FY16-18E due to three key factors: 1) new products in its innovation pipeline, 2) expansion of distribution network and 3) revival in rural demand from H2FY17 onwards.Premiumisation strategy to play out wellIn order to enhance usage of its products, Dabur is launching premium differentiated offerings across product categories. For instance, in Chyawanprash

BSE CODE: 500096NSE CODE: DABURBloomberg CODE: DABUR IN

BUY

Rating as per Large Cap

12 month investment period

CMP Rs 286

TARGET Rs 322

RETURN 13%

SET TO RIDE THE HERBAL WAVE

Geojit BNP Paribas Research

DABUR INDIA LTD.

•

•

•

•

FMCG

category, Ratnaprash is available at 2x the price of base variant. Going forward, we believe premi-um portfolio would help in expanding the margins.

Normal monsoons this year to improve prospectsThrough ‘Project Double’, Dabur has almost tripled its rural pene-tration from 14,865 villages in FY11 to 44,128 villages in FY15. While rural economy has been in slow lane in the past few years owing to poor monsoons, the rural demand is expected to improve from H2FY17 onwards on account of better monsoons coupled with government’s focus on farm sector. Moreover, the implementation of seventh pay commission & GST would bode well for the company.

Valuations

Dabur is better placed than peers given its differentiated offerings, leadership position & distribution reach. We expect revenue & PAT to grow at a CAGR of 9% & 14% respectively over FY16-18E. Further, EBITDA margin is expect-ed to improve by 130bps to 19.3% on account of new product launches & continued focus on premium products. We initiate Dabur with a BUY rating with a TP of Rs322 at 35x FY18E EPS.

INTERVIEW EXCERPTSINVESTMENT IDEAS Geojit BNP Paribas Research

•

•

For full report and disclaimer click here http:// goo.gl/8XKE0c

FUND WATCH

Liquid Funds

ELSS

Large Cap Equity Funds

Midcap Equity Funds

Small Cap Equity Funds

Flexi Cap Funds

Balanced Fund

# Absolute returns are shown in case of Equity Index funds, Equity Funds,Balanced Funds, Fund of Funds for the period less than one-year

Indian Fund performanceAs on 04.10.2016 5 YRS

Return

3YRS1YRS6 Mnth3 Mnth1 Mnth

ICICI Pru Top 100 Fund

SBI BlueChip Fund-Reg

Birla SL Frontline Equity Fund

DSPBR Top 100 Equity Fund-Reg

HDFC Top 200 Fund

1.28 8.25 20.40

1.74 7.53 17.35

0.49 7.64 18.29

0.85 10.42 20.64

1.71 8.71 20.71

22.62 20.11 18.60

17.76 25.81 21.53

16.67 22.83 19.35

16.48 19.40 14.80

16.31 21.60 15.69

HDFC Mid-Cap Opportunities Fund

Sundaram Select Midcap

Kotak Emerging Equity Scheme

SBI Magnum MidCap Fund-Reg

3.39 14.24 28.09

3.73 12.95 28.53

2.97 10.23 27.33

3.24 8.11 23.11

24.86 39.51 25.82

24.60 39.48 24.99

23.17 43.14 26.04

22.51 41.92 28.93

Franklin India Smaller Cos Fund

DSPBR Micro-Cap Fund-Reg

Reliance Small Cap Fund

2.81 10.02 25.43

3.97 9.20 28.35

5.05 11.23 24.78

26.32 43.94 31.08

26.22 52.97 29.67

22.80 49.52 28.83

Birla SL Equity Fund

ICICI Pru Dynamic Plan

4.47 16.53 28.40

0.48 7.87 18.37

25.15 31.86 22.32

19.47 20.22 17.75

Birla SL Pure Value Fund

HDFC Capital Builder Fund

4.35 16.18 27.87

2.77 8.76 17.62

28.06 42.54 25.58

18.24 25.89 18.79

DSPBR Tax Saver Fund-Reg

Reliance Tax Saver (ELSS) Fund

2.29 12.21 24.17

1.63 8.01 18.55

23.52 28.54 21.88

20.02 33.91 21.81

ICICI Pru Liquid Plan

HDFC Cash Mgmt-Savings

6.92 7.07 7.53

6.78 6.92 7.39

7.87 8.61 8.93

7.71 8.53 8.86

ICICI Pru Balanced Fund

HDFC Balanced Fund

HDFC Prudence Fund

UTI CCP Advantage Fund

2.27 8.23 19.19

2.49 8.36 16.69

2.04 8.48 19.10

1.19 8.71 17.53

18.30 23.65 19.39

15.82 26.66 18.38

14.75 25.78 16.57

13.69 20.51 14.94

5 YRS

FUND WATCH

International Fund performanceReturn

3 YRS2 YRS1YRS 5 YRS6 Mth3 Mth1 Mth

Equity Schemes

Fixed Income/Multi Asset/Balanced

As on 04.10.2016

“Disclaimer : Investments in equity, commodity, currency, futures & options are subject to market risk, please read the risk disclosure document before investing. Past performance does not guarantee returns in the future.”

To Invest NowCall the experts

Dubai: Tel: +971 4 3060900Abu Dhabi: Tel: +971 2 4125000 Sharjah: Tel: +971 6 5932000 Al Ain: Tel: +971 3 7648100

Barjeel Geojit

Templeton Latin America -0.9 6.2 17.1 27.9 -16.7 -25.3 -19.1

Templeton Thailand -2.9 2.9 9.6 27.4 -0.6 10.8 72.2

Templeton Emerging Markets 2.3 9.3 17.1 21.6 -5.7 -8.4 9.3

Templeton BRIC 2.7 13.2 20.1 20.8 -5.1 -3.7 0.3

Franklin Technology 1.5 12.5 13.5 18 25.4 44 98.3

Templeton Asian Growth 1.8 8.6 13.2 17.2 -17.4 -10 8

Templeton Shariah Asian Growth 3 7.4 9.8 14.5 -5.5 -6.6 n/a

Franklin India -0.8 9.5 17.3 13.3 16.9 67.8 59

Templeton Emerging Markets Small Co 2.8 9.5 11 11.1 5.5 25.9 61.4

Templeton Shariah Global Equity 0.7 5.5 8 8 -4.2 -1.8 n/a

Franklin Mutual Global Discovery -0.3 5.7 6.4 6.7 -2.2 1.2 50.3

Franklin High Yield A MDis USD 0.7 6.2 14.4 12.3 -2.3 3.8 34.1

Templeton Emerging Markets Bond 0.1 3.4 5.4 11.2 -4.4 -1.5 17

Franklin US Total Return A MDis USD 0 0.6 3.4 4.6 3.5 8.9 16.5

Franklin GCC Bond B Acc USD -0.3 1.1 3.9 3.7 4.5 13.3 n/a

Franklin US Government A MDis USD 0.1 0.2 0.8 1.6 2.9 5.6 6

Templeton Asian Bond A MDis USD -0.8 0.4 -2.1 1.1 -10.8 -6.6 1.7

Poised to gain disproportionate-ly from herbal waveDabur, a 132 years old brand, has been the pioneer in Ayurveda based health & personal care products in India. Dabur has a strong portfolio of powerful brands including Real, Dabur Chyawanprash with the focus primarily on ANH offerings. We believe that Dabur is set to gain from the emerging preference for ANH products. Notably, the promotion of herbal products (contributes ~85% to domestic sales of Dabur) by several of its peers will help in expanding the market.

Bouquet of powerful brandsCurrently, Dabur has 16 brands with a turnover of over Rs1bn, and three brands with turnover of

more than Rs10bn. Importantly, to enhance brand presence, Dabur spends about 13-16% of its sales on ads every year. Dabur’s diverse product portfolio (health supplements, hair care, home care etc) & presence in niche categories has resulted in sales CAGR of robust ~16% over FY11-16. Further, we expect revenue to grow at a CAGR of ~9% over FY16-18E due to three key factors: 1) new products in its innovation pipeline, 2) expansion of distribution network and 3) revival in rural demand from H2FY17 onwards.Premiumisation strategy to play out wellIn order to enhance usage of its products, Dabur is launching premium differentiated offerings across product categories. For instance, in Chyawanprash

INTERVIEW EXCERPTS REAL ESTATE

Now Offering Properties in

Barjeel Geojit is proud to present Al Majaz to our valued, loyal clients.

A real estate company that comes with the backing of an established financial institution that you have trusted all along.

Offering a diversity of global property options with special emphasis on the booming India markets.

South:

North:

West:

East:

Bengaluru, Chennai, Coimbatore, Kochi, Mysore, Mangalore, Thrissur, Kozhicode, Hyderabad, Foothills of Kodaikanal

Delhi, NCR, Gurgaon, Kasauli

Mumbai, Pune, Ahmedabad, Goa, Nagpur

Kolkata, Bhubaneshwar

Documents

“Systematic Investment Plan”Repo Rate: 6.75% CRR: 4.00% of NDTL SLR unchanged at 21.50% Liquidity: 0.25% of NDTL under overnight repo and 0.75% of NDTL under 7 and 14 day term