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Page 1
Chitra Katha
A story told through charts...
Spark Chitra Katha
Market data
BSE Sensex 24,551
NSE Nifty 7,461
Date March 16, 2016
Performance (%)
1m 3m 12m
BSE200 4% -4% -13%
Sensex 4% -3% -14%
Find Spark Research on Bloomberg (SPAK <go>),
Thomson First Call, Reuters Knowledge and Factset
GAUTAM SINGH [email protected] +91 22 4228 8152
GAURAV NAGORI, CFA [email protected] +91 44 4344 0072
‘Spark Chitra Katha’ monitors key macro and market data on an ongoing basis. Importantly, look out for the
interesting charts, which highlights evolving trends, extracted and interpreted from the maze of thousands of
macro and market data points.
Key highlights of this issue:-
Retail inflation heads South: Beating market expectations (5.5%), CPI inflation declined to a four month low of 5.2% in
Feb’16, down from 5.7% in Jan’16. A sharp fall in food inflation (Wt:46%) to 5.5% from 6.7% in Jan’16 mainly contributed
to the decline in CPI inflation. Core inflation, however, went up to 5% in Feb’16, from 4.7% in Jan’16. Post the
announcement of Budget FY17, we had revised our CPI inflation estimate downwards to 5% for Mar’17 from 5.6% earlier
on account of postponement of the 7th Pay and no sharp increase in service tax rate. Assuming a normal monsoon in
2016, CPI inflation is likely to fall to 4.5% by Jun'16, leading to a sharp jump in the real interest rate (~2.25%). Therefore,
we believe that the high real interest rate would provide the room to the RBI to cut repo rate by 25-50 bps in 1HFY17.
Govt taking expenditure route to revive economic growth. The total expenditure (plan + non-plan) has been
increased by 10.8% to Rs. 19.8tn in FY17BE, the fastest growth since FY11. The sharp rise in expenditure has been led
by 15% jump in plan expenditure, again the fastest growth since FY11. Govt has met the fiscal deficit target of 3.9% in
FY16RE without resorting to any accounting jugglery or cuts in plan expenditure. This is the first time in at least last three
years when Govt didn’t resort to cut in plan expenditure in order to meet the fiscal deficit target. Rather, plan expenditure
was Rs. 119bn higher than initially budgeted for FY16.
Govt provides Rs. 512bn for the Seventh Pay Commission recommendations. Our analysis (see slide 3) shows that
Govt has provided for the Seventh Pay Commission recommendations largely as salary hikes and allowances have been
deferred. Irrespective of the 7th CPC, Central govt employees would have got a normal increase in their Pay, Allowances
and Pensions in FY17. Excluding the normal ~9% rise, Govt has factored in ~Rs 512bn rise in total Pay, Allowances and
Pensions of the Central Govt employees in FY17BE. However, the total delta in Pay, Allowances and Pensions of Central
govt employees is Rs. 801bn in FY17BE as compared to FY16.
BSE 200 DII ownership by market cap at 4 years high: Our analysis of BSE 200 constituents ownership for Dec’15
quarter indicates that DII’s ownership by market cap has surged to 12.3%, the highest in the last 4 years whereas FII’s
ownership has largely remained flat at 21.6% versus 21.9% last year. DII’s have increased the highest in sectors such as
Metals and Mining (Coal India), Consumer discretionary and Cement.
Nifty valuations around last 10 year average: Nifty at current levels is trading at last 10 year average of 15x and 2.2x
on 12 month forward PE and PB basis respectively. Our analysis of past historical returns of last 10 years shows that
investing when Nifty 12 month forward PE at 15x has delivered 8-10% return in next 1 year. Buffet’s favorite ratio to
gauge undervaluation- Market cap to GDP for India is at 64% vis-à-vis 75% on an average in last 10 years. Also, currently
75% of BSE 200 stocks are trading below their 200 DMA.
-30%
-20%
-10%
0%
10%
Mar-15 Jun-15 Sep-15 Dec-15 Mar-16
Sensex BSE 200
Page 2
Chitra Katha
Segment-wise contribution to growth (ppt):
Consumption up, investment lowest in 5 qtrs
Source: CSO, Spark Capital Research
Investment growth drops significantly; HH
consumption witnesses a marginal pick up
Source: CSO, Spark Capital Research
Supply side GDP also inches up, led by...
Source: CSO, Spark Capital Research
...marginal uptick in agri and Industry...
Source: CSO, Spark Capital Research
...while construction activities slow down
Source: CSO, Spark Capital Research
Nominal GDP growth above real GDP growth on positive deflator in Q3FY16
Nominal GDP bounces in Q3 FY16, above
real GDP growth
Source: CSO, Spark Capital Research
6.6
7.7
7.3
10.3
6.4
9.2
3
5
7
9
11
13
15
17
Mar-
13
Jun-1
3
Sep
-13
Dec-1
3
Mar-
14
Jun-1
4
Sep
-14
Dec-1
4
Mar-
15
Jun-1
5
Sep
-15
Dec-1
5
(%, yoy)
Real GDP growth Nominal GDP growth
0.9
3.6 3.6 3.1 3.62.6
-0.3
0.1 0.50.5
1.62.6 2.0
2.91.4
-1.0 0.0 -0.1 -0.1
0.52.4
0.8 2.01.3
1.3
-1.0
1.0
3.0
5.0
7.0
9.0
Dec-14 Mar-15 Jun-15 Sep-15 Dec-15
C G I (X-M) E&O
1.55.6
6.4
4.5
8.2
4.1
-6
-3
0
3
6
9
12
Mar-
13
Jun-1
3
Sep
-13
Dec-1
3
Mar-
14
Jun-1
4
Sep
-14
Dec-1
4
Mar-
15
Jun-1
5
Sep
-15
Dec-1
5
(%, yoy)
HH consumption Investment (GCF)
2.1
1.9 2.2
7.6 6.5 6.8
10.4
8.9 8.8
-2
1
4
7
10
13
Dec-1
2
Mar-
13
Jun-1
3
Sep
-13
Dec-1
3
Mar-
14
Jun-1
4
Sep
-14
Dec-1
4
Mar-
15
Jun-1
5
Sep
-15
(%, yoy)
Agriculture Industry Services
8.4 7.17.4
3
4
5
6
7
8
9
Dec-1
2
Mar-
13
Jun-1
3
Sep
-13
Dec-1
3
Mar-
14
Jun-1
4
Sep
-14
Dec-1
4
Mar-
15
Jun-1
5
Sep
-15
Real GVA growth (%, yoy)
3.2
2.6
-8
-5
-2
1
4
7
10
Sep
-12
Dec-1
2
Mar-
13
Jun-1
3
Sep
-13
Dec-1
3
Mar-
14
Jun-1
4
Sep
-14
Dec-1
4
Mar-
15
Jun-1
5
Sep
-15
(%, yoy)
Mining Construction
Macro Indicators: Growth
Page 3
Chitra Katha
Electricity prod. growth accelerates to 6.6%
in Jan’16, steep rise in past 2 months
Source: CSO, Spark Capital Research
IIP growth contracts third straight month...
Source: CSO, Spark Capital Research
...led by a fall in manufacturing output
Source: CSO, Spark Capital Research
Manufacturing PMI hints at recovery ahead
Source: CSO, Spark Capital Research
Mining production growth lowest in last 7
months
Source: CSO, Spark Capital Research
Segment-wise weight in IIP (%);
Manufacturing accounts for >75% of IIP
Source: CSO, Spark Capital Research
IIP: Industrial production contracts for third consecutive month in Jan’16 due to fall in manufacturing output
Macro Indicators: Growth
Mining 14.16
Manufacturing
75.53
Electricity 10.32
2.8
-1.2-1.5
-4
-2
0
2
4
6
8
10
Jan-1
5
Feb
-15
Mar-
15
Ap
r-15
May-1
5
Jun-1
5
Jul-15
Aug
-15
Sep
-15
Oct-
15
No
v-1
5
Dec-1
5
Jan-1
6
%, yo
y
Industrial Production Index (IIP)
3.4
5.1
2.7 3
.9
2.1
5.2
4.8 6
.6
2.7
10.6
-4.7
-2.2
-2.8
-8
-4
0
4
8
12
Jan-1
5
Feb
-15
Mar-
15
Ap
r-15
May-1
5
Jun-1
5
Jul-15
Aug
-15
Sep
-15
Oct-
15
No
v-1
5
Dec-1
5
Jan-1
6
%, yo
y
Manufacturing
49.1
51.1
47
50
53
56
59
62
Sep
-10
Feb
-11
Jul-11
Dec-1
1
May-1
2
Oct-
12
Mar-
13
Aug
-13
Jan-1
4
Jun-1
4
No
v-1
4
Ap
r-15
Sep
-15
Feb
-16
India manufacturing PMI
-1.8
1.6
1.2
-0.6
2.1
-0.4
1.3
4.5
3.5
5.3
1.9
2.7
1.2
-2
0
2
4
6
Jan-1
5
Feb
-15
Mar-
15
Ap
r-15
May-1
5
Jun-1
5
Jul-15
Aug
-15
Sep
-15
Oct-
15
No
v-1
5
Dec-1
5
Jan-1
6
%, yo
y
Mining
3.3
3.2
6.6
-3
0
3
6
9
12
15Jan-1
5
Feb
-15
Mar-
15
Ap
r-15
May-1
5
Jun-1
5
Jul-15
Aug
-15
Sep
-15
Oct-
15
No
v-1
5
Dec-1
5
Jan-1
6
%, yo
y
Electricity
Page 4
Chitra Katha
Consumer goods production flat led by…
Source: CSO, Spark Capital Research
...a sharp fall in non-durable goods output
Source: CSO, Spark Capital Research
Cap goods prod. falls for 3rd straight month
Source: CSO, Spark Capital Research
Basic goods production marginally up
Source: CSO, Spark Capital Research
Intermediate goods production growth up
Source: CSO, Spark Capital Research
Segment-wise weight in IIP (%)
Source: CSO, Spark Capital Research
IIP: Decline in production of cap goods and non-durables lead to the fall in IIP
Macro Indicators: Growth
-1.9
4.9
-0.6 2
.8
-2.2
7.2
1.1 6.0
1.2
18.3
1.0
3.0
0.0
-5
0
5
10
15
20
Jan-1
5
Feb
-15
Mar-
15
Ap
r-15
May-1
5
Jun-1
5
Jul-15
Aug
-15
Sep
-15
Oct-
15
No
v-1
5
Dec-1
5
Jan-1
6
%, yo
y
Consumer Goods
Capital Goods 8.8
Consumer Goods:
Durables 8.5
Consumer Goods:
Non Durables
21.3
Basic Goods 45.7
Intermediate Goods
15.7
12.4
8.3
9.1
5.5
3.0
-2.0
10.1
21.3
10.1 16.5
-24.5
-19.1
-20.4
-30
-25
-20
-15
-10
-5
0
5
10
15
20
25
Jan-1
5
Feb
-15
Mar-
15
Ap
r-15
May-1
5
Jun-1
5
Jul-15
Aug
-15
Sep
-15
Oct-
15
No
v-1
5
Dec-1
5
Jan-1
6
%, yo
y
Capital Goods
-5.7
16.4
5.80.3
-3.0 -3.1-10
0
10
20
30
40
50
Jan-1
5
Feb
-15
Mar-
15
Ap
r-15
May-1
5
Jun-1
5
Jul-15
Aug
-15
Sep
-15
Oct-
15
No
v-1
5
Dec-1
5
Jan-1
6
%, yo
y
Durables Non Durables
4.8
-0.7
1.8
-2
0
2
4
6
8
Jan-1
5
Feb
-15
Mar-
15
Ap
r-15
May-1
5
Jun-1
5
Jul-15
Aug
-15
Sep
-15
Oct-
15
No
v-1
5
Dec-1
5
Jan-1
6
%, yo
y
Basic Goods
0.1 1.3
2.7
-4
-2
0
2
4
6
8Jan-1
5
Feb
-15
Mar-
15
Ap
r-15
May-1
5
Jun-1
5
Jul-15
Aug
-15
Sep
-15
Oct-
15
No
v-1
5
Dec-1
5
Jan-1
6
%, yo
y
Intermediate Goods
Page 5
Chitra Katha
Core sector prod. surges in Jan’16...
Source: Ministry of Commerce and Industry
...led by sharp up-tick in cement production
Source: Ministry of Commerce and Industry
Coal production growth also accelerates
Source: Ministry of Commerce and Industry
Electricity production grew significantly
Source: Ministry of Commerce and Industry
Fertilizer prod. continue to decline
Source: Ministry of Commerce and Industry
Production of natural gas falls sharply
Source: Ministry of Commerce and Industry
Macro Indicators: Growth
3.3 2
.7
6.0
-2
0
2
4
6
8
10
12
14
Jan-1
5
Feb
-15
Mar-
15
Ap
r-15
May-1
5
Jun-1
5
Jul-15
Aug
-15
Sep
-15
Oct-
15
No
v-1
5
Dec-1
5
Jan-1
6
%, yo
y
Electricity
-2.3
-4.1
-4.6
-6.0 -6.1
-15.2-16-14-12-10
-8-6-4-20246
Jan-1
5
Feb
-15
Mar-
15
Ap
r-15
May-1
5
Jun-1
5
Jul-15
Aug
-15
Sep
-15
Oct-
15
No
v-1
5
Dec-1
5
Jan-1
6
%, yo
y
Crude Oil Natural Gas
3.4
-2.80
.1
9.1
-10
-5
0
5
10
15
Jan-1
5
Feb
-15
Mar-
15
Ap
r-15
May-1
5
Jun-1
5
Jul-15
Aug
-15
Sep
-15
Oct-
15
No
v-1
5
Dec-1
5
Jan-1
6
%, yo
y
Steel Cement
0.9
6.1
9.1
4.7 2.14.8
-10
-5
0
5
10
15
20
Jan-1
5
Feb
-15
Mar-
15
Ap
r-15
May-1
5
Jun-1
5
Jul-15
Aug
-15
Sep
-15
Oct-
15
No
v-1
5
Dec-1
5
Jan-1
6
%, yo
y
Coal Ref inery Products
7.1
-0.4
5.2
-0.1
1.3
5.8
8.6
12.6 18.1
16.2
13.4
13.0
6.2
-202468
101214161820
Jan-1
5
Feb
-15
Mar-
15
Ap
r-15
May-1
5
Jun-1
5
Jul-15
Aug
-15
Sep
-15
Oct-
15
No
v-1
5
Dec-1
5
Jan-1
6
%, yo
y
Fertilizers
3.2
3.2
-1.3
0.9 2
.9
-2
0
2
4
6
8
10
Dec-1
4
Jan-1
5
Feb
-15
Mar-
15
Ap
r-15
May-1
5
Jun-1
5
Jul-15
Aug
-15
Sep
-15
Oct-
15
No
v-1
5
Dec-1
5
Jan-1
6
%, yo
y
Eight core industries index
Eight core infra-related sectors show uptick in output led by higher output in Coal, Cement and Electricity
Page 6
Chitra Katha
LCV sales growth remain +ve for 5-months
Source: SIAM, Spark Capital Research
-3.96.5
9.7
33.6
34.3
-20
-10
0
10
20
30
40
50
60
70
Feb
-15
Mar-
15
Ap
r-15
May-1
5
Jun-1
5
Jul-15
Aug
-15
Sep
-15
Oct-
15
No
v-1
5
Dec-1
5
Jan-1
6
Feb
-16
%, yo
y
LCV: Domestic sales MHCV: Domestic sales
LCV exports witness a sharp fall in growth
Source: SIAM, Spark Capital Research
-8.9
5.0
6.5
21.4
-30
-20
-10
0
10
20
30
40
50
60
Feb
-15
Mar-
15
Ap
r-15
May-1
5
Jun-1
5
Jul-15
Aug
-15
Sep
-15
Oct-
15
No
v-1
5
Dec-1
5
Jan-1
6
Feb
-16
%, yo
y
LCV exports MHCV exports
CV sales maintain the momentum
Source: SIAM, Spark Capital Research
Passenger vehicle sales remain low...
Source: SIAM, Spark Capital Research
...while two wheeler sales pick up
Source: SIAM, Spark Capital Research
Three-wheeler domestic sales rebound
Source: SIAM, Spark Capital Research
Auto sales: Passenger vehicle sales growth decelerates while two-wheeler sales inch up
Macro Indicators: Growth
8.4
19.9
-3.8
11.1
-10
-5
0
5
10
15
20
25
30
35
Feb
-15
Mar-
15
Ap
r-15
May-1
5
Jun-1
5
Jul-15
Aug
-15
Sep
-15
Oct-
15
No
v-1
5
Dec-1
5
Jan-1
6
Feb
-16
%, yo
y
CV: Domestic sales CV exports
5.8
1.7
-3.0
23.7
-30
-20
-10
0
10
20
30
40
Feb
-15
Mar-
15
Ap
r-15
May-1
5
Jun-1
5
Jul-15
Aug
-15
Sep
-15
Oct-
15
No
v-1
5
Dec-1
5
Jan-1
6
Feb
-16
%, yo
y
PV: Domestic sales PV exports
12.8
-5.8
-20
-10
0
10
20
30F
eb
-15
Mar-
15
Ap
r-15
May-1
5
Jun-1
5
Jul-15
Aug
-15
Sep
-15
Oct-
15
No
v-1
5
Dec-1
5
Jan-1
6
Feb
-16
%, yo
y
2-Wheeler sales: Domestic 2-Wheeler exports
-10.3
32.1
-31.8
2.7
-60
-40
-20
0
20
40
60
80
100
-20
-10
0
10
20
30
40
Feb
-15
Mar-
15
Ap
r-15
May-1
5
Jun-1
5
Jul-15
Aug
-15
Sep
-15
Oct-
15
No
v-1
5
Dec-1
5
Jan-1
6
Feb
-16
%, yo
y
3-Wheeler sales: Domestic 3-W exports (RHS)
Page 7
Chitra Katha
…while rural wage growth remains low
Source: RBI Spark Capital Research
Cargo traffic growth inches up too
Source: CEIC, Spark Capital Research
Lead indicators hint at mixed trend in economic activities
Hiring activities remain elevated in Feb’16...
Source: RBI, Spark Capital Research
Macro Indicators: Growth
Foreign tourist arrivals pick up in Jan’16
Source: CEIC, Spark Capital Research
6.7
-5
0
5
10
15
20
Oct-
10
Jan-1
1
Ap
r-11
Jul-11
Oct-
11
Jan-1
2
Ap
r-12
Jul-12
Oct-
12
Jan-1
3
Ap
r-13
Jul-13
Oct-
13
Jan-1
4
Ap
r-14
Jul-14
Oct-
14
Jan-1
5
Ap
r-15
Jul-15
Oct-
15
Jan-1
6
Foreign Tourist Arrivals (yoy, %) 3-month moving average
3.3
4.2
-8
-6
-4
-2
0
2
4
6
8
10
Aug
-10
No
v-1
0
Feb
-11
May-1
1
Aug
-11
No
v-1
1
Feb
-12
May-1
2
Aug
-12
No
v-1
2
Feb
-13
May-1
3
Aug
-13
No
v-1
3
Feb
-14
May-1
4
Aug
-14
No
v-1
4
Feb
-15
May-1
5
Aug
-15
No
v-1
5
Feb
-16
Cargo Traf f ic growth (ytd, %, yoy)
17.7
-1.0
6.0
20.0
17.7
20.7
-5
0
5
10
15
20
25
May/1
1
Aug/1
1
Nov/1
1
Fe
b/1
2
May/1
2
Aug/1
2
Nov/1
2
Fe
b/1
3
May/1
3
Aug/1
3
Nov/1
3
Fe
b/1
4
May/1
4
Aug/1
4
Nov/1
4
Fe
b/1
5
May/1
5
Aug/1
5
Nov/1
5
Fe
b/1
6
Naukri Job Speak Index (% yoy, 3-month moving average)
17.6
3.2
-1.8
-5
0
5
10
15
20
25
30
May-0
5
Dec-0
5
Jul-06
Fe
b-0
7
Sep-0
7
Apr-
08
Nov-0
8
Jun-0
9
Jan-1
0
Aug-1
0
Mar-
11
Oct-
11
May-1
2
Dec-1
2
Jul-13
Fe
b-1
4
Sep-1
4
Apr-
15
Nov-1
5
Rural wage growth: Nominal ( % yoy) Rural wage growth:Real ( % yoy)
Page 8
Chitra Katha
Lowering differential between petrol and diesel prices leading to sales mix reversal favoring Petrol PV
Petrol and Diesel price differential in downtrend
Source: Bloomberg, Spark Capital Research
Diesel and Petrol PV vehicles sales mix
Source: Industry, Spark Capital Research
Structurally declining kerosene volume
Source: PPAC, Spark Capital Research
Petrol versus Diesel YoY volume growth
Source: PPAC, Spark Capital Research
-5
0
5
10
15
20
25
Jun
-12
Aug
-12
Oct-
12
Dec-1
2
Feb-1
3
Ap
r-13
Jun
-13
Aug
-13
Oct-
13
Dec-1
3
Feb-1
4
Ap
r-14
Jun
-14
Aug
-14
Oct-
14
Dec-1
4
Feb-1
5
Ap
r-15
Jun
-15
Aug
-15
Oct-
15
Dec-1
5
Feb-1
6
Petrol (% YoY 3mma) Diesel (% YoY 3mma)
0
5
10
15
20
25
30
35
Jun
-11
Oct-
11
Feb-1
2
Jun
-12
Oct-
12
Feb-1
3
Jun
-13
Oct-
13
Feb-1
4
Jun
-14
Oct-
14
Feb-1
5
Jun
-15
Oct-
15
Feb-1
6
Mumbai Petrol-Diesel differential (Rs/Ltr)
8478 75
6553
42 4755
1622 25
3547
58 5345
0
10
20
30
40
50
60
70
80
90
100
FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15
Diesel (%) Petrol (%)
-20
-15
-10
-5
0
5
10
15
Jun
-12
Aug
-12
Oct-
12
Dec-1
2
Feb-1
3
Ap
r-13
Jun
-13
Aug
-13
Oct-
13
Dec-1
3
Feb-1
4
Ap
r-14
Jun
-14
Aug
-14
Oct-
14
Dec-1
4
Feb-1
5
Ap
r-15
Jun
-15
Aug
-15
Oct-
15
Dec-1
5
Feb-1
6
LPG (% YoY 3mma) Kerosene (% YoY 3mma)
Macro Indicators: Growth
Page 9
Chitra Katha Inflation down to a four month low; to fall to 4.5% by Jun’16...
Macro Indicators: Retail inflation
CPI inflation eases to a four month low of 5.2% in Feb’16
Source: GoI, Spark Capital Research
MSP driven food category eases led by fall in pulses prices
Source: GoI, Spark Capital Research
Food category contribution to CPI inflation comes down
Source: GoI, Spark Capital Research
Sharp fall in food inflation in Feb’16
Source: GoI, Spark Capital Research
5.7
5.2
4.7 5.0
3.0
3.5
4.0
4.5
5.0
5.5
6.0
6.5
7.0
7.5
8.0
Jun-1
4
Jul-14
Aug-1
4
Sep-1
4
Oct-
14
Nov-1
4
Dec-1
4
Jan-1
5
Fe
b-1
5
Mar-
15
Apr-
15
May-1
5
Jun-1
5
Jul-15
Aug-1
5
Sep-1
5
Oct-
15
Nov-1
5
Dec-1
5
Jan-1
6
Fe
b-1
6
(%, yoy)
CPI inflation Core inflation
5.5
4.4
5.3
4.0
4.5
5.0
5.5
6.0
6.5
7.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
10.0
Jul-
14
Aug-1
4
Sep-1
4
Oct-
14
Nov-1
4
Dec-1
4
Jan-1
5
Fe
b-1
5
Mar-
15
Apr-
15
May-1
5
Jun-1
5
Jul-
15
Aug-1
5
Sep-1
5
Oct-
15
Nov-1
5
Dec-1
5
Jan-1
6
Fe
b-1
6
Inflation (%, yoy)
Food and Beverages Services Housing (RHS)
8.5
3.6
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
10.0
Jun-1
4
Jul-14
Aug-1
4
Sep-1
4
Oct-
14
Nov-1
4
Dec-1
4
Jan-1
5
Fe
b-1
5
Mar-
15
Apr-
15
May-1
5
Jun-1
5
Jul-15
Aug-1
5
Sep-1
5
Oct-
15
Nov-1
5
Dec-1
5
Jan-1
6
Fe
b-1
6
MSP linked food (wt:16.9%) Non-MSP linked food (32:5%)
1.0 0.9 0.8 0.9 1.0 0.8 0.8 1.0 1.4 1.6 1.7 1.7 1.5
2.1 2.0 1.8 1.7 1.9
1.0 1.0 1.3
1.3 1.3 1.3 1.4 1.2
0.4 0.4 0.4 0.4
0.4
0.3 0.4 0.4
0.4 0.4 0.4 0.4
0.3
0.5 0.5 0.4 0.4
0.4
0.4 0.4 0.4
0.4 0.4 0.4 0.4
0.4
0.6 0.5 0.5 0.5
0.5
0.4 0.4 0.5
0.5 0.5 0.5 0.6
0.6
0.9 0.9 0.9 1.1
1.2
0.9 0.8 0.9
1.0 1.1 1.2 1.2
1.2
5.4 5.2
0
1
2
3
4
5
6
Fe
b-1
5
Mar-
15
Apr-
15
May-1
5
Jun-1
5
Jul-15
Aug-1
5
Sep-1
5
Oct-
15
Nov-1
5
Dec-1
5
Jan-1
6
Fe
b-1
6
Contribution to CPI inflation, ppt
MSP linked food Non-MSP linked food Fuel & Light
Clothing & Footwear Housing Services
CPI
Page 10
Chitra Katha
WPI inflation remains in –ve zone
Source: Office of the Economic Adviser
Food inflation softens
Source: Office of the Economic Adviser
Manufactured index up (m/m)
Source: Office of the Economic Adviser
WPI inflation to slip into positive territory in next two months
Category-wise contribution to WPI inflation
Source: Office of the Economic Adviser, Spark Capital Research
Macro Indicators: Wholesale inflation
0.1
-1.6-2.2
-0.9
-5
-4
-3
-2
-1
0
1
Feb
-15
Mar-
15
Ap
r-15
May-1
5
Jun-1
5
Jul-15
Aug
-15
Sep
-15
Oct-
15
No
v-1
5
Dec-1
5
Jan-1
6
Feb
-16
%, yo
y
Core WPI WPI inf lation
6.03.4
-9.2-6.4
-20
-15
-10
-5
0
5
10
Feb
-15
Mar-
15
Ap
r-15
May-1
5
Jun-1
5
Jul-15
Aug
-15
Sep
-15
Oct-
15
No
v-1
5
Dec-1
5
Jan-1
6
Feb
-16
%, yo
y
Food inf lation Fuel inf lation
-0.3 -0
.1
0.0 0.3
-0.1
-0.4
-0.4
0.2
0.0
-0.2
-0.4
0.2 0.3
-0.6
-0.4
-0.2
0.0
0.2
0.4
Feb
-15
Mar-
15
Ap
r-15
May-1
5
Jun-1
5
Jul-15
Aug
-15
Sep
-15
Oct-
15
No
v-1
5
Dec-1
5
Jan-1
6
Feb
-16
%, m
om
Manufactured products index (%, mom)
2.8 2.3
-0.6 0.6 1.3
0.4
1.8 1.7
-3.0 -2.8
-1.8 -1.0
1.7 2.2
-0.9 -0.9
-0.7
-4.6 -3.7
-2.0
-0.9
-0.9
Dec-1
3
Jan-1
4
Fe
b-1
4
Mar-
14
Apr-
14
May-1
4
Jun-1
4
Jul-14
Aug-1
4
Sep-1
4
Oct-
14
Nov-1
4
Dec-1
4
Jan-1
5
Fe
b-1
5
Mar-
15
Apr-
15
May-1
5
Jun-1
5
Jul-15
Aug-1
5
Sep-1
5
Oct-
15
Nov-1
5
Dec-1
5
Jan-1
6
Fe
b-1
6
ppt
Primary Articles Fuel & Power Manufactured WPI
Page 11
Chitra Katha
RBI keeps policy rates unchanged in Feb
Source: RBI, Spark Capital Research
No change in SLR and CRR
Source: RBI, Spark Capital Research
Banks’ base rate down 60bps since Apr’15
Source: CEIC, Spark Capital Research
A tight liquidity situation
Source: RBI, Spark Capital Research
10-year G-sec yields soften post Budget
Source: CEIC, Spark Capital Research
Yield curve steepens
Source: Bloomberg, Spark Capital Research
RBI to cut rate by 25-50bps in 1HFY17; Further interest rate easing to be led by improving liquidity
Macro Indicators: Interest Rates
6.75
5.75
7.75
5
6
7
8
9
10
Oct-
13
Dec-1
3
Feb
-14
Ap
r-14
Jun-1
4
Aug
-14
Oct-
14
Dec-1
4
Feb
-15
Ap
r-15
Jun-1
5
Aug
-15
Oct-
15
Dec-1
5
Feb
-16
%
Repo Reverse Repo MSF rate
4.0
4.0
23.0
21.50
21.0
21.5
22.0
22.5
23.0
23.5
3.0
3.5
4.0
4.5
5.0
Oct-
13
Dec-1
3
Feb
-14
Ap
r-14
Jun-1
4
Aug
-14
Oct-
14
Dec-1
4
Feb
-15
Ap
r-15
Jun-1
5
Aug
-15
Oct-
15
Dec-1
5
Feb
-16
CRR (%) SLR (%) - RHS
10.039.85
9.509.4
9.5
9.6
9.7
9.8
9.9
10.0
10.1
10.2
Oct-
13
Dec-1
3
Feb
-14
Ap
r-14
Jun-1
4
Aug
-14
Oct-
14
Dec-1
4
Feb
-15
Ap
r-15
Jun-1
5
Aug
-15
Oct-
15
Dec-1
5
Feb
-16
Base Rate: Five Major Banks (%)
-134
-250
-200
-150
-100
-50
0
50
100
150
200
250
No
v-1
4
Feb
-15
Ap
r-15
Jun-1
5
Aug
-15
Oct-
15
Dec-1
5
Feb
-16
LAF + MSF (7D moving avg.) - Rs. bn
8.76
8.05
7.517.75
8.04
7.0
7.5
8.0
8.5
9.0M
ay-1
4
Jun-1
4
Jul-14
Sep
-14
Oct-
14
Dec-1
4
Jan-1
5
Mar-
15
Ap
r-15
Jun-1
5
Jul-15
Sep
-15
Oct-
15
Dec-1
5
Jan-1
6
Mar-
16
10-year Gsec yield (%)
7.0
7.5
8.0
8.5
3M 6M 1Y 2Y 3Y 4Y 5Y 7Y 9Y 10Y 15Y
%
Current 6M back 1Y back
Page 12
Chitra Katha
Gap between deposit & credit growth narrows
Source: RBI, Spark Capital Research
Credit-deposit ratio inches up to 76.7%
Source: RBI, Spark Capital Research
Investment deposit ratio falls
Source: RBI, Spark Capital Research
Forex reserves remains near historic high
Source: RBI, Spark Capital Research
Import covers reaches above 12months
Source: RBI, Spark Capital Research
RBI’s intervention comes down in Jan’16
Source: RBI, Spark Capital Research
Sharp rebound in credit growth since Nov’15, leading to pick up in CD ratio
Macro Indicators: Monetary Conditions
11.0
11.6
9
10
11
12
13
20-F
eb
-15
20-M
ar-
15
17-A
pr-
15
15-M
ay-1
5
12-J
un-1
5
10-J
ul-15
7-A
ug
-15
4-S
ep
-15
2-O
ct-
15
30-O
ct-
15
27-N
ov-1
5
25-D
ec-1
5
22-J
an-1
6
19-F
eb
-16
%, yo
y
Deposit growth Credit growth
76.7
74
75
76
77
20-F
eb
-15
20-M
ar-
15
17-A
pr-
15
15-M
ay-1
5
12-J
un-1
5
10-J
ul-15
7-A
ug
-15
4-S
ep
-15
2-O
ct-
15
30-O
ct-
15
27-N
ov-1
5
25-D
ec-1
5
22-J
an-1
6
19-F
eb
-16
Credit Deposit Ratio (%)
29.1
28
29
30
31
20-F
eb
-15
20-M
ar-
15
17-A
pr-
15
15-M
ay-1
5
12-J
un-1
5
10-J
ul-15
7-A
ug
-15
4-S
ep
-15
2-O
ct-
15
30-O
ct-
15
27-N
ov-1
5
25-D
ec-1
5
22-J
an-1
6
19-F
eb
-16
Investment Deposit Ratio (%)
350.9
310
320
330
340
350
360
20-F
eb
-15
3-A
pr-
15
15-M
ay-1
5
26-J
un-1
5
7-A
ug
-15
18-S
ep
-15
30-O
ct-
15
11-D
ec-1
5
22-J
an-1
6
4-M
ar-
16
US
$, b
n
Foreign Exchange Reserves ($, bn)
2.7
3.1
6.7
12.1
7.9
7.7
5.4
2.6
0.6
0.2
-1.6 -0
.1
1.9
0.0
-0.2 0.0
Oct-
14
No
v-1
4
Dec-1
4
Jan-1
5
Feb
-15
Mar-
15
Ap
r-15
May-1
5
Jun-1
5
Jul-15
Aug
-15
Sep
-15
Oct-
15
No
v-1
5
Dec-1
5
Jan-1
6
US
$, b
n
RBI Intervention: Net US$ Purchase
8.7
12.012.6
5
6
7
8
9
10
11
12
13
Feb
-14
Ap
r-14
Jun-1
4
Aug
-14
Oct-
14
Dec-1
4
Feb
-15
Ap
r-15
Jun-1
5
Aug
-15
Oct-
15
Dec-1
5
Feb
-16
Import cover (no. of month)
Page 13
Chitra Katha
Credit growth in Agriculture sector picks up to 13.4% in Jan’16,
following 12.5% growth in Sep ‘15
Source: MOSPI, Spark Capital Research
Marginal pick up in industrial credit growth in Jan’16; but it still
remains very low
Source: Ministry of Statistics and Programme Implementation (MOSPI)
Services sector credit growth also picks up to 8.9% in Jan’16, after
remaining at around 6.5% for over a year
Source: SEBI, Spark Capital Research
Credit card outstanding continues to grow in double digits in
Jan’16, reflecting positive sentiments at urban consumer level
Source: CGA, Spark Capital Research
Sectoral deployment of credit: Marginal uptick in credit growth picks up in Agri and Services sectors
Macro Indicators: Monetary Conditions
24.4
5.6
0
5
10
15
20
25
30
35
40
Jan-0
7
Jul-07
Jan-0
8
Jul-08
Jan-0
9
Jul-09
Jan-1
0
Jul-10
Jan-1
1
Jul-11
Jan-1
2
Jul-12
Jan-1
3
Jul-13
Jan-1
4
Jul-14
Jan-1
5
Jul-15
Jan-1
6
Industrial credit growth (%, yoy) (Share in total credit: 45%)
9.28.9
0
5
10
15
20
25
Sep
-11
No
v-1
1
Jan-1
2
Mar-
12
May-1
2
Jul-12
Sep
-12
No
v-1
2
Jan-1
3
Mar-
13
May-1
3
Jul-13
Sep
-13
No
v-1
3
Jan-1
4
Mar-
14
May-1
4
Jul-14
Sep
-14
No
v-1
4
Jan-1
5
Mar-
15
May-1
5
Jul-15
Sep
-15
No
v-1
5
Jan-1
6
Services credit growth (%, yoy) (Share in total credit: 24%)
25.8
24.1
-5
0
5
10
15
20
25
30
Sep
-11
No
v-1
1
Jan-1
2
Mar-
12
May-1
2
Jul-12
Sep
-12
No
v-1
2
Jan-1
3
Mar-
13
May-1
3
Jul-13
Sep
-13
No
v-1
3
Jan-1
4
Mar-
14
May-1
4
Jul-14
Sep
-14
No
v-1
4
Jan-1
5
Mar-
15
May-1
5
Jul-15
Sep
-15
No
v-1
5
Jan-1
6
Credit Card Outstanding (%, yoy)
12.8
13.4
4
8
12
16
20
24
28
32
Jan-0
7
Jul-07
Jan-0
8
Jul-08
Jan-0
9
Jul-09
Jan-1
0
Jul-10
Jan-1
1
Jul-11
Jan-1
2
Jul-12
Jan-1
3
Jul-13
Jan-1
4
Jul-14
Jan-1
5
Jul-15
Jan-1
6
Cre
dit
gro
wth
(%
)
Agri (Share in total credit: 11%)
Page 14
Chitra Katha
Bank credit: Personal loan growth picks up; Industry loan growth witnesses marginal uptick
Share (%) (Rs. Bn)
Jan-16 Jan-16 Jan-16 Dec-15 Nov-15 Oct-15 Sep-15 Aug-15 Jan-15
I Gross Bank Credit (II + III) 100.0 64,983 9.5 9.2 8.6 8.1 8.4 8.2 9.6
II Food Credit 1.5 1,002 -6.3 1.7 0.5 -6.0 -2.3 -2.0 3.7
III Non-food Credit (1 to 4) 98.5 63,981 9.8 9.3 8.8 8.3 8.6 8.4 9.7
1 Agriculture & Allied Activities 13.1 8,514 13.4 12.7 11.8 11.1 12.8 12.1 16.6
2 Industry (Micro & Small, Medium and Large ) 41.9 27,244 5.6 5.3 5.0 4.6 4.9 5.0 6.4
3 Services 22.7 14,732 8.9 9.2 6.8 6.8 5.9 5.9 7.2
3.1 Transport Operators 1.5 984 7.8 11.0 5.4 5.6 6.7 4.6 1.6
3.2 Computer Software 0.3 187 8.1 11.9 11.6 11.3 10.7 12.3 -9.2
3.3 Tourism, Hotels and Restaurants 0.6 371 1.8 6.9 3.1 1.2 1.1 1.2 -8.5
3.4 Shipping 0.2 103 8.8 8.1 6.0 3.4 6.3 3.9 -0.3
3.5 Professional Services 1.6 1,033 24.7 36.1 15.8 13.2 13.9 11.4 5.9
3.6 Trade 5.6 3,662 7.2 11.0 8.9 9.2 12.2 12.3 11.0
3.6.1 Wholesale Trade (other than food procurement) 2.5 1,650 -0.6 2.1 3.9 4.8 9.7 8.8 6.0
3.6.2 Retail Trade 3.1 2,012 14.6 19.5 13.5 13.1 14.6 15.6 16.3
3.7 Commercial Real Estate 2.7 1,766 7.1 5.9 4.5 4.2 2.0 4.5 13.4
3.8 Non-Banking Financial Companies (NBFCs) 5.0 3,260 10.7 5.5 2.4 2.8 1.2 0.3 5.1
3.9 Other Services 5.2 3,367 7.1 6.2 6.9 9.0 3.9 4.3 7.6
4 Personal Loans 20.8 13,491 18.1 16.1 18.0 16.9 18.0 17.3 16.4
4.1 Consumer Durables 0.3 170 14.0 13.4 12.9 11.4 12.7 12.7 35.4
4.2 Housing (Including Priority Sector Housing) 11.1 7,238 18.4 19.3 18.6 17.6 18.0 17.8 17.1
4.3 Advances against Fixed Deposits 1.0 639 2.1 6.4 9.3 10.5 13.1 10.2 7.5
4.4 Advances to Individuals against share, bonds, etc. 0.1 58 12.7 46.5 78.3 23.6 26.0 32.8 50.2
4.5 Credit Card Outstanding 0.6 386 24.1 23.3 27.7 22.1 22.2 21.8 22.8
4.6 Education 1.1 683 7.5 8.1 7.9 6.7 7.3 6.2 5.8
4.7 Vehicle Loans 2.2 1,420 15.2 -3.1 15.5 14.3 16.3 17.0 22.0
4.8 Other Personal Loans 4.5 2,898 25.5 23.2 20.6 20.6 23.1 20.4 15.4
Growth (yoy, %)
Source: RBI, Spark Capital Research
Macro Indicators: Monetary Conditions
Page 15
Chitra Katha
Bank credit: Loan growth in energy, mining, chemical and textile sectors has taken the biggest hit
Source: RBI, Spark Capital Research
Macro Indicators: Monetary Conditions
Share (%) (Rs. Bn) Growth (yoy, %)
Jan-16 Jan-16 Jan-16 Dec-15 Nov-15 Oct-15 Sep-15 Aug-15 Jan-15
2.1 Mining & Quarrying (incl. Coal) 1.4 387 5.2 -0.3 -5.4 -6.8 -12.1 -14.0 1.2
2.2 Food Processing 5.6 1,525 -2.4 -1.9 -1.3 0.3 2.8 7.9 13.1
2.2.1 Sugar 1.3 365 4.4 3.7 7.9 7.2 4.0 4.8 11.5
2.2.2 Edible Oils & Vanaspati 0.7 193 -6.5 -5.7 -5.4 -1.3 -0.4 -4.2 -0.7
2.2.3 Tea 0.1 36 13.2 12.9 9.7 -6.4 -1.4 1.2 4.9
2.2.4 Others 3.4 931 -4.5 -3.6 -4.0 -1.7 3.2 11.9 17.4
2.3 Beverage & Tobacco 0.7 178 -4.6 -3.4 -3.0 -6.5 -8.5 -5.8 13.2
2.4 Textiles 7.4 2,027 2.7 2.1 1.2 0.2 1.0 1.5 1.4
2.4.1 Cotton Textiles 3.7 1,017 4.3 3.3 2.2 1.2 0.4 2.0 1.5
2.4.2 Jute Textiles 0.1 22 -1.4 -10.5 -7.7 -7.4 1.8 0.1 13.9
2.4.3 Man-Made Textiles 0.8 208 4.1 5.2 5.6 4.2 6.4 5.9 -4.4
2.4.4 Other Textiles 2.9 780 0.4 0.1 -0.9 -1.7 0.4 -0.2 2.5
2.5 Leather & Leather Products 0.4 103 0.1 -0.7 0.7 0.7 0.2 -0.2 4.3
2.6 Wood & Wood Products 0.4 96 -0.2 4.7 4.3 3.4 6.0 7.2 3.9
2.7 Paper & Paper Products 1.3 362 7.0 5.2 3.9 4.3 3.8 3.6 4.7
2.8 Petroleum, Coal Products & Nuclear Fuels 1.8 477 -14.7 -10.4 -20.9 -19.7 -22.9 -21.4 -5.7
2.9 Chemicals & Chemical Products 5.7 1,562 3.4 2.9 1.5 3.3 3.3 1.3 -1.0
2.9.1 Fertiliser 0.8 229 -8.2 -8.1 2.0 -0.7 0.9 -7.8 -6.0
2.9.2 Drugs & Pharmaceuticals 1.9 513 6.6 6.9 6.6 5.8 6.3 7.7 0.4
2.9.3 Petro Chemicals 1.3 362 7.1 -0.5 -11.4 0.1 -2.4 -0.3 -0.3
2.9.4 Others 1.7 458 3.5 7.2 7.2 5.1 5.7 0.7 0.0
2.10 Rubber, Plastic & their Products 1.3 363 -3.7 0.7 -2.4 -4.2 1.0 -0.5 2.7
2.11 Glass & Glassware 0.3 89 0.9 0.0 -2.2 -4.2 -3.2 -2.9 1.8
2.12 Cement & Cement Products 2.0 538 -3.8 -1.1 0.4 -0.8 3.0 4.5 7.5
2.13 Basic Metal & Metal Product 15.0 4,099 10.5 8.8 8.7 7.5 8.8 10.0 7.0
2.13.1 Iron & Steel 11.1 3,037 11.8 9.4 10.0 8.2 9.6 9.3 5.0
2.13.2 Other Metal & Metal Product 3.9 1,062 6.8 7.2 5.1 5.7 6.6 12.0 13.0
2.14 All Engineering 5.6 1,526 3.0 6.3 4.6 4.1 5.7 5.7 5.3
2.14.1 Electronics 1.4 379 9.5 1.2 8.9 9.6 7.3 8.2 6.3
2.14.2 Others 4.2 1,147 1.0 8.0 3.2 2.4 5.2 4.9 5.0
2.15 Vehicles, Vehicle Parts & Transport Equipment 2.5 679 1.4 -1.5 0.9 3.6 4.6 3.9 2.2
2.16 Gems & Jewellery 2.6 718 6.1 0.2 -0.3 1.3 4.5 3.5 0.8
2.17 Construction 2.7 739 0.8 3.2 3.0 1.5 0.9 1.7 17.2
2.18 Infrastructure 36.3 9,883 9.8 8.4 8.7 8.3 8.7 8.2 10.5
2.18.1 Power 22.0 5,992 9.9 10.0 10.4 10.6 12.1 10.6 14.9
2.18.2 Telecommunications 3.4 937 8.5 6.2 5.0 2.6 5.3 7.1 -1.3
2.18.3 Roads 6.6 1,789 8.3 7.9 7.5 7.2 4.6 6.3 7.7
2.18.4 Other Infrastructure 4.3 1,165 12.7 3.1 4.5 3.6 1.3 0.1 4.0
2.19 Other Industries 6.9 1,892 5.4 9.8 11.2 8.0 2.1 0.6 0.1
2 Total Industries 100.0 27,244 5.6 5.3 5.0 4.6 4.9 5.0 6.4
Page 16
Chitra Katha
Currency in circulation picks up since Nov
Source: RBI, Spark Capital Research
Reserve money growth significantly up
Source: RBI, Spark Capital Research
M1 money supply growth also picks up
Source: RBI, Spark Capital Research
M2 money supply growth at 13.6%
Source: RBI, Spark Capital Research
M3 Money supply growth inches up
Source: RBI, Spark Capital Research
Money multiplier decreases sharply
Source: RBI, Spark Capital Research
Reserve money and M3 money supply growth picks up in last three months
11.2 12.1
14.2
10
11
12
13
14
15
16
Feb
-15
Mar-
15
Ap
r-15
May-1
5
Jun-1
5
Jul-15
Aug
-15
Sep
-15
Oct-
15
No
v-1
5
Dec-1
5
Jan-1
6
Feb
-16
%, yo
y
Reserve Money (M0)
10.712.0
13.4
7
9
11
13
15
Feb
-15
Mar-
15
Ap
r-15
May-1
5
Jun-1
5
Jul-15
Aug
-15
Sep
-15
Oct-
15
No
v-1
5
Dec-1
5
Jan-1
6
Feb
-16
%, yo
y
M1 Money Supply
11.2
11.1
11.3
10
11
11
12
12F
eb
-15
Mar-
15
Ap
r-15
May-1
5
Jun-1
5
Jul-15
Aug
-15
Sep
-15
Oct-
15
No
v-1
5
Dec-1
5
Jan-1
6
Feb
-16
%, yo
y
M3 Money Supply
5.765.71
5.61
5.5
5.6
5.7
5.8
Feb
-15
Mar-
15
Ap
r-15
May-1
5
Jun-1
5
Jul-15
Aug
-15
Sep
-15
Oct-
15
No
v-1
5
Dec-1
5
Jan-1
6
Feb
-16
Money Multiplier
10.7
12.2
13.6
8
9
10
11
12
13
14
Feb
-15
Mar-
15
Ap
r-15
May-1
5
Jun-1
5
Jul-15
Aug
-15
Sep
-15
Oct-
15
No
v-1
5
Dec-1
5
Jan-1
6
Feb
-16
%, yo
y
M2 Money Supply
Macro Indicators: Monetary Conditions
15.3
14.8
16.3
13.0
13.5
14.0
14.5
15.0
15.5
16.0
16.5
Aug
-14
Oct-
14
Dec-1
4
Feb
-15
Ap
r-15
Jun-1
5
Aug
-15
Oct-
15
Dec-1
5
Feb
-16
Currency in Circulation (Rs tn)
Page 17
Chitra Katha
Exports & imports remain weak
Source: Ministry of Commerce and Industry
Non-oil imports also contract
Source: Ministry of Commerce and Industry
Trade deficit remains low
Source: Ministry of Commerce and Industry
Exports and imports continue to contract
Source: Ministry of Commerce and Industry
Non-oil non-gold imports growth turns +ve
Source: Ministry of Commerce and Industry
Gold imports down in Feb’16
Source: Ministry of Commerce and Industry
Base effect starts kicking in for exports and imports growth but both remain low in absolute terms
Macro Indicators: External Sector
22.0 24.0
22.0
22.4
22.5
23.2
21.5
21.8
21.2
19.5
22.4
21.1
20.7
28.7
35.4
33.2
32.9
33.1 3
6.2
33.7
32.3
30.9
29.7
33.9
28.7
27.3
Feb-1
5
Mar-
15
Ap
r-15
May-1
5
Jun
-15
Jul-
15
Aug
-15
Sep
-15
Oct-
15
No
v-1
5
Dec-1
5
Jan
-16
Feb-1
6
$, b
n
Exports ($, bn) Imports ($, bn)
6.1 7.4
7.5 8.6
8.7 9.5
7.4
6.7
6.9
6.5
6.7
5.0
4.8
22.6 2
8.0
25.7
24.3
24.4 26.7
26.4
25.6
24.0
23.2 2
7.3
23.7
22.5
Feb-1
5
Mar-
15
Ap
r-15
May-1
5
Jun
-15
Jul-
15
Aug
-15
Sep
-15
Oct-
15
No
v-1
5
Dec-1
5
Jan
-16
Feb-1
6
$, bn
Oil Imports ($, bn) Non Oil Imports ($, bn)
-6.7
-11.4
-11.2
-10.4
-10.6
-12.9
-12.3 -1
0.5
-9.6
-10.2
-11.5
-7.6 -6
.5
-18
-15
-12
-9
-6
-3
0
Feb-1
5
Mar-
15
Ap
r-15
May-1
5
Jun
-15
Jul-
15
Aug
-15
Sep
-15
Oct-
15
No
v-1
5
Dec-1
5
Jan
-16
Feb-1
6
$, bn
Trade Balance ($, bn)
-13.3
-5.7-14.7
-5.0
-35
-30
-25
-20
-15
-10
-5
0
Feb-1
5
Mar-
15
Ap
r-15
May-1
5
Jun
-15
Jul-
15
Aug
-15
Sep
-15
Oct-
15
No
v-1
5
Dec-1
5
Jan
-16
Feb-1
6
Exports (%, yoy) Imports (%, yoy)
2.3
-25
-15
-5
5
15
25
35
15
20
25
30
May-1
3
Aug
-13
No
v-1
3
Feb-1
4
May-1
4
Aug
-14
No
v-1
4
Feb-1
5
May-1
5
Aug
-15
No
v-1
5
Feb-1
6
Non-oil non-gold imports ($, bn)(Growth, %) - RHS
2.0
5.0
3.1
2.4
2.0
3.0
5.0
2.1
1.7
3.5
3.8
2.9
1.4
Fe
b-1
5
Mar-
15
Apr-
15
May-1
5
Jun-1
5
Jul-15
Aug-1
5
Sep-1
5
Oct-
15
Nov-1
5
Dec-1
5
Jan-1
6
Fe
b-1
6
$, bn
Gold Imports ($, bn)
Page 18
Chitra Katha
BoP: CAD is well below RBI’s target of 2.5% of GDP, expected to be below 1% of GDP in FY17
...on account of FII outflows during the quarter
Source: RBI, Spark Capital Research
Short term debt inches up marginally
Source: RBI, Spark Capital Research
($bn) Sep-14 Dec-14 Mar-15 Jun-15 Sep-15
CAD (I+II) = A -10.9 -7.7 -0.6 -6.1 -8.2
Merchandise balance (I) -39.7 -38.6 -31.6 -34.2 -37.4
Invisibles (i+ii+iii) = (II) 28.7 30.9 30.9 28.0 29.2
Softw are Exports (i) 16.9 17.8 18.6 17.7 18.2
Remittances (ii) 16.5 16.5 16.6 16.3 16.4
Others (iii) -4.7 -3.5 -4.3 -5.9 -5.5
Capital Account (a+b+c+d+e) = B 17.6 22.9 30.0 18.1 7.2
FDI inflow s (a) 7.5 6.9 9.3 10.1 6.6
Portfolio f low s (b) 9.8 6.3 13.7 -2.3 -6.4
ECBs (c) -0.4 -0.1 0.9 0.3 -1.2
NRI Deposits (d) 4.1 3.6 4.0 5.9 4.2
Others (e) -3.3 6.2 2.1 4.1 4.1
Errors and Omissions (C.) 0.3 -2.0 0.8 -0.5 0.1
Overall BoP (A+B+C) 6.9 13.2 30.1 11.4 -0.9
CAD (% of GDP) -2.2 -1.5 -0.1 -1.2 -1.6
BoP: CAD remains low @ 1.6% of GDP but Capital a/c surplus narrows sharply...
($bn) Sep-14 Dec-14 Mar-15 Jun-15 Sep-15
Assets (A) 488.2 491.8 522.4 534.1 528.3
Liabilities (i+ii+iii+iv) = B 849.3 848.2 887.1 897.5 886.1
Direct Investment (i) 252.7 252.8 265.5 271.1 271.0
Equity Securities (ii) 148.8 145.0 153.6 151.1 140.6
Debt Securities (iii) 67.5 70.1 79.7 85.0 82.0
Other Investment (iv) 380.3 380.3 388.2 390.4 392.5
Currency & Deposits 108.9 110.2 115.3 120.1 122.0
Loans 176.1 176.0 177.0 174.9 173.2
Trade Credits 82.5 81.1 83.7 82.2 82.6
Other Liabilities 12.8 13.0 12.2 13.3 14.7
IIP: Net (A-B) -361.1 -356.4 -364.7 -363.4 -357.8
Assets to Liability Ratio (%) 57.5 58.0 58.9 59.5 59.6
India's International Investment Position (IIP)
90.1
86.1
17.8
15
16
17
18
19
20
21
22
23
24
25
60
70
80
90
100
Jun-1
2
Sep
-12
Dec-1
2
Mar-
13
Jun-1
3
Sep
-13
Dec-1
3
Mar-
14
Jun-1
4
Sep
-14
Dec-1
4
Mar-
15
Jun-1
5
Sep
-15
Short-term debt ($bn) Short-term (% of external debt) - RHS
-10
-5
0
5
10
15
Jun-1
2
Sep
-12
Dec-1
2
Mar-
13
Jun-1
3
Sep
-13
Dec-1
3
Mar-
14
Jun-1
4
Sep
-14
Dec-1
4
Mar-
15
Jun-1
5
Sep
-15
FDI inf lows ($ bn) Portfolio flows ($ bn)
Macro Indicators: External Sector
Page 19
Chitra Katha
Exchange rate: Rupee depreciates against major currencies in Feb’16
Rupee vs. US dollar
Source: RBI, Spark Capital Research
Rupee vs. Euro
Source: RBI, Spark Capital Research
Rupee vs. Pound
Source: RBI, Spark Capital Research
Rupee vs. Yen
Source: RBI, Spark Capital Research
Rupee vs. Yuan
Source: RBI, Spark Capital Research
Real effective exchange rate
Source: RBI, Spark Capital Research
56.50
68.62
50
52
54
56
58
60
62
64
66
68
70
May-1
3
Aug
-13
No
v-1
3
Feb
-14
May-1
4
Aug
-14
No
v-1
4
Feb
-15
May-1
5
Aug
-15
No
v-1
5
Feb
-16
INR/USD
86.01
95.20
70
75
80
85
90
95
100
105
110
May-1
3
Aug
-13
No
v-1
3
Feb
-14
May-1
4
Aug
-14
No
v-1
4
Feb
-15
May-1
5
Aug
-15
No
v-1
5
Feb
-16
INR/GBP
73.68
75.08
60
65
70
75
80
85
90
May-1
3
Aug
-13
No
v-1
3
Feb
-14
May-1
4
Aug
-14
No
v-1
4
Feb
-15
May-1
5
Aug
-15
No
v-1
5
Feb
-16
INR/Euro
56.03
60.78
45
50
55
60
65
70
May-1
3
Aug
-13
No
v-1
3
Feb
-14
May-1
4
Aug
-14
No
v-1
4
Feb
-15
May-1
5
Aug
-15
No
v-1
5
Feb
-16
INR/100Yen
8.96
10.23
8
9
10
11
May-1
3
Aug
-13
No
v-1
3
Feb
-14
May-1
4
Aug
-14
No
v-1
4
Feb
-15
May-1
5
Aug
-15
No
v-1
5
Feb
-16
INR/Yuan
108.0
113.2
110.4
95
97
99
101
103
105
107
109
111
113
115
May-1
3
Aug
-13
No
v-1
3
Feb
-14
May-1
4
Aug
-14
No
v-1
4
Feb
-15
May-1
5
Aug
-15
No
v-1
5
Feb
-16
REER: 36 Currencies
Macro Indicators: External Sector
Page 20
Chitra Katha
…yet Govt remains on the path of fiscal consolidation
Source: GoI, Spark Capital Research
Non-pan expenditure is estimated to grow at 9.2%...
Source: GoI, Spark Capital Research
…led by 15% jump in plan expenditure, again the fastest growth
since FY11
Source: India Budget, Spark Capital Research
Total expenditure is estimated to increase by 10.8% to Rs. 19.8tn in
FY17BE, the fastest growth since FY11
Source: India Budget, Spark Capital Research
19.8
16.9
7.3
10.8
5
10
15
20
25
0
5
10
15
20
FY
07
FY
08
FY
09
FY
10
FY
11
FY
12
FY
13
FY
14
FY
15
FY
16
FY
17B
E
Total expenditure (Rs. tn) Total expenditure (Growth, %, yoy)
14.3
8.9 9.2
5
10
15
20
25
0
5
10
15
FY
07
FY
08
FY
09
FY
10
FY
11
FY
12
FY
13
FY
14
FY
15
FY
16
FY
17B
E
Non-plan expenditure (Rs. tn) Non-Plan Expenditure (%, yoy)
4.8
5.5
0.3
3.1
15.3
-5
0
5
10
15
20
25
30
35
0
1
2
3
4
5
6
FY
07
FY
08
FY
09
FY
10
FY
11
FY
12
FY
13
FY
14
FY
15
FY
16
FY
17B
E
Plan expenditure (Rs. tn) Plan Expenditure (%, yoy)
4.1 3.9
3.5
3
FY15 FY16RE FY17BE FY18BE
Fiscal deficit target (% of GDP)
Govt maintains the fiscal target of 3.5% despite higher expenditure
Macro Indicators: Fiscal situation
Page 21
Chitra Katha
Rs. bn Growth (%, yoy)
FY15 FY16BE FY16RE FY17BE FY16BE FY16RE FY17BE
Total receipt 16,637 17,775 17,854 19,781 6.8 7.3 10.8
Revenue receipt 11,015 11,416 12,061 13,770 3.6 9.5 14.2
Total tax receipt 12,449 14,495 14,596 16,309 16.4 17.2 11.7
Share of state, UT in Central taxes 3,413 5,296 5,121 5,768 55.2 50.1 12.6
Tax receipt for Centre 9,036 9,198 9,475 10,541 1.8 4.9 11.2
Direct taxes 7,075 7,980 7,520 8,471 12.8 6.3 12.6
Personal income tax 2,786 3,274 2,991 3,532 17.5 7.3 18.1
Corporate income tax 4,289 4,706 4,530 4,939 9.7 5.6 9.0
Indirect taxex 5,374 6,515 7,076 7,838 21.2 31.7 10.8
Customs duty 1,880 2,083 2,095 2,300 10.8 11.4 9.8
Excise duty 1,888 2,298 2,841 3,187 21.7 50.5 12.2
Services tax 1,680 2,098 2,100 2,310 24.9 25.0 10.0
Other tax (74) 36 39 41 -148.3 -153.3 4.4
Non-tax receipt 1,979 2,217 2,586 3,229 12.1 30.7 24.9
Interest 238 236 231 296 -0.9 -2.8 28.0
Dividend and profit 898 1,007 1,183 1,238 12.0 31.7 4.7
Other non-tax 842 975 1,172 1,695 15.7 39.1 44.7
Capital receipt 5,622 6,359 5,793 6,010 13.1 3.0 3.8
Net market borrowings 4,451 4,564 4,019 4,252 2.5 -9.7 5.8
Disinvestment of PSUs 377 695 253 565 84.2 -32.9 123.2
Receipts from small savings etc. 322 224 534 221 -30.5 65.8 -58.6
Recovery of loans 137 108 189 106 -21.7 37.6 -43.8
Other capital receipt 334 768 797 866 130.3 139.0 8.6
Total expenditure 16,637 17,775 17,854 19,781 6.8 7.3 10.8
Non-plan expenditure 12,010 13,122 13,082 14,281 9.3 8.9 9.2
Revenue expenditure 11,094 12,060 12,127 13,274 8.7 9.3 9.5
Interest payments 4,024 4,561 4,426 4,927 13.3 10.0 11.3
Defence 1,368 1,521 1,432 1,628 11.2 4.7 13.6
Explicit subsidies 2,583 2,438 2,578 2,504 -5.6 -0.2 -2.9
Others 3,119 3,539 3,690 4,215 13.5 18.3 14.2
Capital expenditure 916 1,062 955 1,006 15.9 4.2 5.4
Defence 819 946 814 863 15.5 -0.6 6.1
Others 97 116 141 143 18.9 44.9 1.2
Plan expenditure 4,626 4,653 4,772 5,500 0.6 3.1 15.3
Revenue expenditure 3,576 3,300 3,350 4,036 -7.7 -6.3 20.5
Central plan 1,001 1,397 1,332 1,761 39.6 33.2 32.1
States plan 2,575 1,904 2,018 2,276 -26.1 -21.7 12.8
Capital expenditure 1,050 1,353 1,422 1,464 28.8 35.4 2.9
Central plan 918 1,208 1,278 1,320 31.7 39.3 3.3
States plan 133 144 143 143 8.5 8 0.0
Gross fiscal deficit 5,107 5,556 5,351 5,339 8.8 4.8 -0.2
Revenue deficit 3,655 3,945 3,416 3,540 7.9 -6.5 3.6
Primary deficit 1,083 995 925 412 -8.1 -14.6 -55.4
Net market borrowings 4,469 4,564 4,019 4,252 2.1 -10.1 5.8
Gross fiscal deficit (% of GDP) 4.1 3.9 3.9 3.5 … … …
Revenue deficit (% of GDP) 2.9 2.8 2.5 2.3 … … …
Primary deficit (% of GDP) 0.9 0.7 0.7 0.3 … … …
Source: India Budget, Spark Capital Research
Fiscal Arithmetic: FM has been realistic in taking tax assumptions; a little aggressive on non-tax revenue
Macro Indicators: Fiscal situation
Page 22
Chitra Katha
The word “rural” regains its ground in Budget speech
Source: GoI, Spark Capital Research
MNREGA spend also increased to the highest level in five years
Source: GoI, Spark Capital Research
Plan rural spend is increased by 25% to Rs. 875bn in FY17BE
Source: India Budget, Spark Capital Research
Total subsidy is estimated to decline to 1.7% of GDP in FY17BE
Source: India Budget, Spark Capital Research
1.2 1.4
2.6
1.9
1.7
0.0
0.5
1.0
1.5
2.0
2.5
3.0
FY
00
FY
01
FY
02
FY
03
FY
04
FY
05
FY
06
FY
07
FY
08
FY
09
FY
10
FY
11
FY
12
FY
13
FY
14be
FY
15
FY
16R
E
FY
17B
E
Total subsidy (% of GDP)
113 120 160
335
401 400
330 334 325 337
385
-
50
100
150
200
250
300
350
400
450
FY
07
FY
08
FY
09
FY
10
FY
11
FY
12
FY
13
FY
14
FY
15
FY
16R
E
FY
17B
E
Central allocation for NREGA (Rs. bn)
875
700.0 697.6
611.1 662.0
766.3
852.4
678.1 672.3
376.5
FY17E FY16BE FY15 FY14 FY13 FY12 FY11 FY10 FY09 FY08
Ministry of Rural Development (Rs bn)
34
26
22 20
17
22
17 20
11
5
11
23
0
5
10
15
20
25
30
35
40
FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17
Number of times the word "rural" featured in Budget Speech
Reforms on subsidy continue; Main focus remains on rural India
Macro Indicators: Fiscal situation
Page 23
Chitra Katha
Ministry of Railways Total (excluding Railways & Defence) Total (excluding Defence)
(Rs. bn) FY15 FY16RE FY17BE FY15 FY16RE FY17BE FY15 FY16RE FY17BE
Pay 224 244 406 350 379 500 574 622 906
Allowances 337 369 413 465 509 520 802 878 933
Total 561 612 819 815 888 1020 1376 1500 1839
Growth (%, yoy) Growth (%, yoy) Growth (%, yoy)
Pay 8.9 66.6 8.2 32.1 8.5 45.6
Allowances 9.4 12.0 9.4 2.2 9.4 6.3
Total 9.2 33.7 8.9 14.9 9.0 22.6
Total increase w/o 7th CPC* 668 968 1635
Net Pay & Allowances provision
for 7th CPC 151 53 204
Total delta in FY17 over FY16 52 207 73 133 124 339
* Assuming 9% growth vs. FY16,
Govt has provided for the Seventh Pay Commission recommendations largely as salary hikes and allowances have been deferred
Defence
(Rs. bn) FY15 FY16RE FY17BE
Total (Rs bn) 1300 1361 1546
Growth (% yoy) ... 4.7 13.6
Total increase w/o 7th CPC** 1429
Net Pay & Allowances provision
for 7th CPC 117
Total delta in FY17 over FY16 61 185
(A)
(B)
** Assuming 5% growth vs. FY16
(C) Pension
(Rs. bn) FY15 FY16RE FY17BE
Total (Rs bn) 936 957 1234
Growth (% yoy) 2.3 28.9
Total increase w/o 7th CPC** 1043
Net Pay & Allowances provision for 7th
CPC 190
Total delta in FY17 over FY16 21 276
Net Pay, Allowances & Pensions provision for 7th CPC in FY17BE = A+B+C
i.e. Rs. 204bn + Rs. 117bn + Rs. 190 = Rs. 512bn
Excluding the normal ~9% rise, Govt has factored in
~Rs. 512bn rise in total Pay, Allowances and Pensions
of the Central Govt employees in FY17BE.
The total delta in Pay, Allowances and Pensions of
Central govt employees is Rs. 801bn in FY17BE as
compared to FY16.
Irrespective of the 7th CPC, Central govt employees would
have got a normal increase their Pay, Allowances and
Pensions in FY17.
Govt provides Rs. 512bn for the Seventh Pay Commission
Macro Indicators: Fiscal situation
Page 24
Chitra Katha
…….whereas Developed markets posted negative returns
Source: Bloomberg, Spark Capital Research.
All Emerging markets barring China and India posted positive performance in CY16
Source: Bloomberg, Spark Capital Research.
Indian equity market has fallen by 6% in CY16
1311
7 6 6 30
0
-6-6 -7
-19
-25
22
12
7 82
74 2 4 4
74
-1
-30
-20
-10
0
10
20
30
Brazil Turkey Thailand Russia Indonesia Taiwan South Africa Malaysia Sensex Nifty Hang Seng Shangai Shenzen
Change YTD % Change 1M %
Macro Indicators: Market Performance
4
0
-1 -1 -2
-3 -4 -5
-6
-8
-10
-12
-5
-2 -3 -3 -2
1
-6
-3
-6 -6
-4 -5
-14
-12
-10
-8
-6
-4
-2
0
2
4
6
Canada Korea Dow Jones US S&P 500 UK Australia France NASDAQ Euro Stoxx Germany Japan Spain
Change YTD % Change 1M %
Page 25
Chitra Katha
8
6 6
5 4 3 3
3 2 2
0 0 -1 -1
-3
9
4
-1
1
12
6
2 1
-1
2
1
2 2 1
-1 -4
-2
0
2
4
6
8
10
12
14
Brazil Real Indo Rup JPY Malay Ringgit
Ruble AU $ Sing $ Thai Bhat Euro Turkish Lira Yuan S. Af Rand Korean Won INR GBP
Change YTD % Change 1M %
All the emerging markets currencies have appreciated in last one month
Source: Bloomberg, Spark Capital Research.
Precious metals recovered this year with Gold delivering 16% return…..
Source: Bloomberg, Spark Capital Research.
……So is the case with base metals
Source: Bloomberg, Spark Capital Research.
INR remained stable in last 1 month; depreciated by just 1% in CY16
Macro Indicators: Market Performance
33
126 5
2 2
-2-4
-8 -8-1
3 2
-17
94
-1 -2
-14-8
-20
-10
0
10
20
30
40
Ch
ina Iro
n o
re
Zin
c
Co
pper
Bre
nt
Lead
Alu
min
ium
AU
Co
al
Ind
o C
oal
WT
I
S.A
f C
oal
Change YTD % Change 1M %
16 16
11 11
7
0-1 0-2
-3
6
4
-5
0
5
10
15
20
Gold (INR/10g)
Gold ($/OZ) Silver (INR/kg) Silver ($/OZ) Platinum ($/Oz)
Palladium ($/Oz)
Change YTD % Change 1M %
Page 26
Chitra Katha
-0.8
-2.9 -4.5
-5.5 -6.0 -6.1 -7.0 -7.0 -7.6 -7.8 -8.1 -8.3
-9.7
-12.6 -12.9 -13.2 -13.4
6.6
2.7 2.5 3.7 4.2 4.2 3.8 4.1 3.7 3.7
1.5 2.7
6.2 6.9
2.4 2.2 2.5
-15
-10
-5
0
5
10
Metals Tech BSE TMT FMCG Sensex Nifty BSE 200 Auto BSE 500 Oil & Gas H. care BSE Midcap
Banks Realty Power Cap gds BSE Small cap
Change YTD% Change 1M%
Bank Nifty has fallen by 10% in CY16
BSE Small caps underperformed Sensex by 7% in CY16
Source: Bloomberg, Spark Capital Research.
Macro Indicators: Market Performance
Delivery volume increased to 46% in month of Mar 2016
Source: Bloomberg, Spark Capital Research
2.5 2.5 2.9 2.4 2.8 2.9 2.7 2.8 2.6 2.7 3.1 2.2 3.4
3.2
5.3 5.1 4.7 3.5 4.7 3.2 4.0 4.2 4.6 4.5 4.8 4.3 4.2 3.9 4.5 4.9 3.8
3.9
3.6 4.0 4.6 4.5 4.8
43%
38%
41%
41%
37%
41%
45%
41%
37%
43%44%45% 44%
39%
42%
36%
38%39%
42%43%
44%
43%
41%40%
46%
42%
45%
41%
43%44%
38%
39%
36%
39%41%
40%
46%
30%
32%
34%
36%
38%
40%
42%
44%
46%
48%
2.0
2.5
3.0
3.5
4.0
4.5
5.0
5.5
Mar-
13
Ap
r-13
May-1
3
Jun
-13
Jul-
13
Aug
-13
Sep
-13
Oct-
13
No
v-1
3
Dec-1
3
Jan
-14
Feb-1
4
Mar-
14
Ap
r-14
May-1
4
Jun
-14
Jul-
14
Aug
-14
Sep
-14
Oct-
14
No
v-1
4
Dec-1
4
Jan
-15
Feb-1
5
Mar-
15
Ap
r-15
May-1
5
Jun
-15
Jul-
15
Aug
-15
Sep
-15
Oct-
15
No
v-1
5
Dec-1
5
Jan
-16
Feb-1
6
Mar-
16
Cash market Turnover (Rs. tn) Delivered volume % (RHS)
Page 27
Chitra Katha
MSCI Indices: India’s Forward PB @ 2.6x
Source: Bloomberg, Spark Capital Research
2.6 2.6 2.5
1.9
1.6
1.3 1.3 1.3 1.2 1.1
0.6
0.0
0.5
1.0
1.5
2.0
2.5
3.0
Ind
on
esi
a
US
Ind
ia
Wo
rld
Euro
pe
AP
xJ
EM
Asia
Bra
zil
AP
AC
Ch
ina
Russia
MSCI Indices: India’s Forward PE @ 16.4x
Source: Bloomberg, Spark Capital Research
MSCI Indices US$ performance – Brazil and Russia posted the highest positive return in last 1 month
Source: Bloomberg, Spark Capital Research
EM countries recovered after negative performance in Jan’16
22
14
9
(1) (2) (2) (2)(3) (3)
(6) (8)
33
5
17
12 11
8 10
13
9 9
15
(10)
(5)
0
5
10
15
20
25
30
35
Brazil Indonesia Russia APAC ex JP EM Asia US World APAC Europe India China
Change YTD% Change 1M%
16.7 16.4 15.8 15.3 15.1
12.8 12.7 12.4 11.6
9.6
5.9
4
6
8
10
12
14
16
18
US
Ind
ia
Wo
rld
Ind
on
esi
a
Euro
pe
AP
AC
AP
xJ
Bra
zil
EM
Asia
Ch
ina
Russia
Macro Indicators: Market and Sector valuations
Page 28
Chitra Katha
Stocks near 52 week high (BSE 200 subset)
Source: Bloomberg, Spark Capital Research
Stock & Index 52 week H/L: Key trends
Stocks near 52 week high (BSE 200 subset)
Source: Bloomberg, Spark Capital Research
Nifty stocks performance snapshot
Source: Bloomberg, Spark Capital Research
0.0% 2.0% 4.0% 6.0% 8.0% 10.0%
Supreme IndustriesJSW
Hero MotoRamco Cements
MaricoAshok Leyland
Vakrangee Soft.Asian Paints
NHPCSanofi
Bajaj FinHind. Zinc
RILInfosysTorrent
IndusIndTVS Motor
GrasimPidilite
HavellsHDFC Bank
Near 52 Week highs
0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 8.0%
ICICIBosch
ACCNestle
Dr. Reddy'sNMDC
SKFSouth Indian Bank
Gujarat PipavavIOBTCS
Axis BankBHEL
Allahabad BankSBIBOIL&T
Procter & GamblePNB
CanaraNear 52 Week lows
Macro Indicators: Market Performance
Name Sector Price Performance (%)
Current 52W high 52W low 1m 3M YTD
Hindalco Industries Materials 84 145 59 25.2 6.2 (36.3)
Tata Steel Materials 300 385 200 21.8 23.0 (8.0)
Cairn India Energy 150 240 107 19.8 18.3 (33.6)
Adani Sez Shipping 228 375 169 19.4 (9.5) (25.5)
Vedanta Materials 88 233 58 17.5 5.1 (55.0)
Tata Motors Auto 360 574 266 13.6 (5.0) (34.8)
Hero MotoCorp Auto 2,813 2,859 2,251 12.2 9.6 7.8
IndusInd Bank Banks 918 989 784 11.5 0.0 4.9
SBI Banks 185 305 148 10.4 (18.2) (34.0)
Bosch Auto 18,129 27,990 15,736 10.2 (3.8) (31.9)
Dr Reddy's Labs Pharma 3,133 4,387 2,750 9.6 4.6 (7.2)
PNB Banks 83 181 69 8.9 (31.5) (49.8)
ICICI Bank Banks 221 342 181 8.8 (10.2) (33.0)
Reliance Industries Oil & Gas 1,021 1,090 796 7.8 4.6 20.0
Yes Bank Banks 811 898 590 7.6 17.3 0.9
Bharti Airtel Telecom 343 452 282 7.5 10.9 (14.3)
Tech Mahindra IT 460 720 407 7.0 (11.5) (34.7)
Ultratech Cement Materials 2,990 3,370 2,531 6.7 4.4 1.4
HDFC Bank Banks 1,027 1,128 928 5.5 (3.1) (1.5)
Hindustan Unilever FMCG 841 958 765 4.5 (2.1) (10.7)
ITC FMCG 317 360 268 4.2 (2.0) (6.7)
BPCL Oil & Gas 811 987 704 4.0 (8.9) 10.9
Infosys IT 1,134 1,220 933 3.9 5.3 2.2
ONGC Energy 207 343 188 3.5 (4.8) (33.9)
Ambuja Cements Materials 205 266 185 3.5 6.0 (20.0)
Asian Paints Materials 885 927 693 3.0 0.7 9.4
HDFC Banks 1,111 1,387 1,011 2.9 (7.9) (16.3)
Bank of Baroda Banks 143 216 109 2.8 (9.6) (20.0)
L&T Cap gds 1,181 1,888 1,016 2.7 (8.0) (30.2)
TCS IT 2,330 2,770 2,115 2.7 (1.9) (9.8)
Kotak Mahindra Bank Banks 640 745 586 2.3 (6.9) (4.6)
Grasim Industries Materials 3,551 3,843 3,233 2.3 (3.6) (3.2)
NTPC Power 127 160 107 2.0 (3.4) (20.2)
GAIL India Power 341 418 260 1.9 (0.0) (12.0)
Wipro IT 533 664 508 1.4 (4.6) (16.6)
Zee Entertainment Media 386 441 300 0.6 (5.4) 12.2
Axis Bank Banks 419 613 367 0.3 (4.0) (26.5)
Power Grid Power 139 156 121 0.2 7.3 (5.2)
Sun Pharma Pharma 843 1,201 704 (0.8) 9.0 (16.7)
ACC Materials 1,240 1,678 1,173 (1.3) (7.3) (23.3)
Tata Power Power 59 82 55 (1.3) (4.4) (26.3)
Maruti Suzuki Auto 3,655 4,790 3,193 (1.5) (20.9) 0.1
BHEL Cap gds 106 290 90 (1.7) (36.1) (58.3)
M&M Auto 1,205 1,442 1,091 (1.8) (6.5) (1.8)
HCL Tech IT 812 1,048 785 (1.8) (3.9) (19.3)
Cipla/India Pharma 525 748 505 (2.7) (17.8) (25.4)
Bajaj Auto Auto 2,278 2,656 1,913 (2.7) (6.5) 12.6
Lupin Pharma 1,723 2,129 1,588 (4.2) (3.9) (8.2)
Coal India Energy 296 447 287 (8.8) (6.0) (19.0)
Idea Cellular Telecom 99 204 97 (9.2) (24.9) (45.6)
Page 29
Chitra Katha
BSE 200- 148 stocks trading below 200 DMA
Source: Bloomberg, Spark Capital Research
Current price versus 200 DMA
BSE 200 stocks trading below their 200DMA
Source: Bloomberg, Spark Capital Research
Macro Indicators: Market Performance
32
47
39
30
21
14 13
4 0
11 15
32
45
34
46
17
0
10
20
30
40
50
-50% to -20% -20% to -10% -10% to -5% -5% to 0% 0% to +5% +5% to 10% +10% to +20% +20% to +50%
200 DMA 100 DMA
BSE 200 stocks trading above their 200DMA
Source: Bloomberg, Spark Capital Research
Company name Last price 200 DMA % from 200 DMA 52W High 52W Low
Hero MotoCorp Ltd 2,813 2,571 9% 2,857 2,252
SKS Microfinance Ltd 523 478 10% 590 369
Tata Elxsi Ltd 1,937 1,764 10% 2,396 978
TVS Motor Co Ltd 286 260 10% 309 201
Ramco Cements Ltd/The 391 354 10% 406 270
Ashok Leyland Ltd 96 86 11% 100 64
Kansai Nerolac Paints Ltd 278 248 12% 299 196
NHPC Ltd 21 19 13% 22 16
Marico Ltd 243 215 13% 252 179
Jubilant Life Sciences Ltd 367 325 13% 455 138
Hindustan Zinc Ltd 171 152 13% 181 116
Rajesh Exports Ltd 649 566 15% 746 181
Tata Steel Ltd 300 254 18% 384 200
Supreme Industries Ltd 774 656 18% 780 540
Petronet LNG Ltd 248 210 18% 272 160
Bajaj Finance Ltd 6,467 5,441 19% 6,838 3,919
Reliance Infrastructure Ltd 501 411 22% 622 282
JSW Steel Ltd 1,194 949 26% 1,207 801
Torrent Power Ltd 235 179 31% 253 137
Vakrangee Ltd 220 152 45% 229 87
Company name Last price 200 DMA % from 200 DMA 52W High 52W Low
Bharat Heavy Electricals Ltd 106 198 -46% 290 90
Oriental Bank of Commerce 90 142 -37% 242 75
IDFC Ltd 38 58 -35% 87 35
Suzlon Energy Ltd 14 21 -34% 31 13
Punjab National Bank 83 126 -34% 181 69
Jaiprakash Associates Ltd 7 11 -33% 28 6
Idea Cellular Ltd 99 144 -31% 204 98
Allahabad Bank 52 75 -31% 110 40
Bank of India 95 137 -30% 233 80
Rural Electrification Corp Ltd 167 239 -30% 353 153
Wockhardt Ltd 979 1,402 -30% 2,000 706
Syndicate Bank 62 87 -28% 118 49
Canara Bank 187 259 -28% 411 156
Just Dial Ltd 658 907 -27% 1,455 378
Jubilant Foodworks Ltd 1,142 1,533 -26% 1,984 897
Ipca Laboratories Ltd 535 707 -24% 888 533
Oil India Ltd 308 407 -24% 526 301
Pfizer Ltd/India 1,705 2,247 -24% 2,724 1,694
Power Finance Corp Ltd 169 220 -23% 292 140
Reliance Communications 52 67 -23% 92 46
United Spirits Ltd 2,466 3,141 -21% 4,029 2,232
Engineers India Ltd 160 204 -21% 252 143
Jindal Steel & Power Ltd 61 77 -21% 193 48
Karnataka Bank Ltd/The 97 123 -21% 158 85
Dish TV India Ltd 79 100 -21% 122 65
JSW Energy Ltd 67 84 -21% 124 59
Federal Bank Ltd 48 60 -21% 80 41
Page 30
Chitra Katha
FII’s pulled out US$4bn from Indian equities in last 1 year
Source: Bloomberg
Foreign investment in Equity Instruments (net) Foreign investment in Debt Instruments (net)
US $mn 1QCY 2QCY 3QCY 4QCY Total US $mn 1QCY 2QCY 3QCY 4QCY Total
2016 -1,457 - - - -1,457 2016 -1,387 - - - -1,387
2015 6,000 184 (2,576) (334) 3,274 2015 6,903 -461 -110 1059 7390
2014 4,086 5,832 3,896 2,348 16,162 2014 6,160 4,252 9,329 6,511 26,252
2013 10,151 2,959 61 6,584 19,754 2013 2,294 -4,017 -4,750 -2,016 -8,489
2012 8,866 -350 7,617 8,414 24,548 2012 3,941 229 897 1,795 6,862
2011 -657 1,151 -644 -362 -512 2011 2,424 600 1,174 4,348 8,546
2010 4,369 2,331 12,554 10,067 29,321 2010 4,103 1,371 3,733 843 10,050
2009 -1,345 6,421 7,369 5,194 17,639 2009 -1,306 145 928 1,393 1,160
2008 -3,551 -3,322 -2,710 -3,335 -12,918 2008 907 -655 1,787 665 2,705
2007 1,534 4,207 7,462 5,315 18,518 2007 139 377 515 1,395 2,425
2006 3,930 -1,381 2,678 3,110 8,338 2006 -300 296 360 526 883
2005 3,801 891 3,864 2,345 10,901 2005 113 -261 -186 -903 -1,236
2004 3,198 305 1,471 3,653 8,627 2004 354 -409 -85 831 692
2003 361 933 1,824 3,585 6,702 2003 168 677 68 96 1,008
2002 583 -91 181 65 738 2002 126 -113 -56 54 10
Source: Bloomberg, Spark Capital Research
FII’s sold about US$3bn from Indian Equities and Debt in CY16
Macro Indicators: Fund flows
3.7
1.2 2.8 1.8 1.9 1.1
0.9 0.1
2.3
(0.1)
2.9
1.4
1.7 1.2 (0.1)
(1.0)
0.9
(2.6) (0.9)
0.8
(1.1)
0.0
(1.7) (1.2)
1.4
1.6
(1.8)
3.4
2.7 3.8 2.8
2.7 2.8
1.9
1.8
3.7
2.2 1.0 0.5
(1.3)
0.3
(0.1)
(0.1)
0.0
2.4
(0.6) (0.6)
0.2
(1.2)
(0.4)
-4
-2
0
2
4
6
8
Mar-
14
Apr-
14
May-1
4
Jun-1
4
Jul-14
Aug-1
4
Sep-1
4
Oct-
14
Nov-1
4
Dec-1
4
Jan-1
5
Fe
b-1
5
Mar-
15
Apr-
15
May-1
5
Jun-1
5
Jul-15
Aug-1
5
Sep-1
5
Oct-
15
Nov-1
5
Dec-1
5
Jan-1
6
Fe
b-1
6
Mar-
16
FII Investments in Debt ($bn) FII Investments in Equity ($bn)
Page 31
Chitra Katha
DII’s bought US$3bn in Equities which is more than to offset FII selling of US$1.5bn till date in CY16
Source: Bloomberg, Spark capital research
SBI Broader indices ETF AUM increased by 16x compared to Aug15 due to increased inflows from EPFO
Domestic mutual funds net debt investment (US$bn)
Source: Bloomberg, Spark Capital Research
Domestic mutual funds net equity investment -(US$
12bn on YTD basis
Source: Bloomberg, Spark Capital Research
SBI Nifty and Sensex ETF AUM- Rs 55bn as of Feb
16
Source: Bloomberg, Spark Capital Research
Macro Indicators: Fund flows
-2.2
-1.1
-0.8 -0.8 -0.5
0.4
-0.2
0.7
-1.2
0.9
-1.3
0.4 0.0
1.8 1.3
1.9
0.1
2.5
1.6
-0.2
1.2 0.9
1.9
1.5
-0.7
-3
-2
-1
0
1
2
3
Mar-
14
Apr-
14
May-1
4
Jun-1
4
Jul-14
Aug-1
4
Sep-1
4
Oct-
14
Nov-1
4
Dec-1
4
Jan-1
5
Fe
b-1
5
Mar-
15
Apr-
15
May-1
5
Jun-1
5
Jul-15
Aug-1
5
Sep-1
5
Oct-
15
Nov-1
5
Dec-1
5
Jan-1
6
Fe
b-1
6
Mar-
16
DII Investment in Equity ($bn)
0 0
3 2
4
2
(2)
(4)
(0)
(4) (4)
7
12
-6
-4
-2
0
2
4
6
8
10
12
14
FY
04
FY
05
FY
06
FY
07
FY
08
FY
09
FY
10
FY
11
FY
12
FY
13
FY
14
FY
15
YT
D
5 4 8
12 18 18
38
55
84 86 90 96
41
0
10
20
30
40
50
60
70
80
90
100
FY
04
FY
05
FY
06
FY
07
FY
08
FY
09
FY
10
FY
11
FY
12
FY
13
FY
14
FY
15
YT
D
0.1 3.1
12.0
18.7
25.7
34.0
42.3
48.5
0.0 0.9 3.8
6.1 8.2 9.9 12.1 13.9
0
10
20
30
40
50
60
SBI Nifty ETF SBI Sensex ETF
Page 32
Chitra Katha
BSE 200 Ownership Analysis- DII’s has increased their ownership to 12.3% whereas FII ownership decreased to 21.6%
Source: Bloomberg, Spark Capital Research.
DII’s increased the stakes in Metals, Consumer discretionary and Cement sectors
Source: Bloomberg, Spark Capital Research
DII’s ownership of BSE 200 by market cap stood at 12.3%- Highest in last 6 years
Macro Indicators: Ownership
54.2 54.2 52.0 51.2 50.3 48.7
11.7 12.2 11.9 11.0 11.1 12.3
16.7 16.5 18.7 20.7 21.9 21.6
17.4 17.2 17.4 17.1 16.6 16.5
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Dec-10 Dec-11 Dec-12 Dec-13 Dec-14 Dec-15
Promoter DII FII Others
458 456
236
356 284
198 178 127 95 87 49 34 27 2
-36 -97 -97
-469
-210 -164
-317
96
-89
36
-357
24
-284
89
-120
168
-118 -65
-600
-400
-200
0
200
400
600
Metals & Mining
Consumer Disc
Cement NBFC Media Oil & Gas Auto IT Banks- Private
Power Banks- PSU
Infra & Realty
Pharma Telecom Capital Goods
FMCG
Yo
Y h
old
ing
s c
ha
ng
e (
bp
s)
DII Holding % FII Holding %
12.1 12.3
16.7
21.6
10
12
14
16
18
20
22
24
Sep-1
0
Dec-1
0
Mar-
11
Jun-1
1
Sep-1
1
Dec-1
1
Mar-
12
Jun-1
2
Sep-1
2
Dec-1
2
Mar-
13
Jun-1
3
Sep-1
3
Dec-1
3
Mar-
14
Jun-1
4
Sep-1
4
Dec-1
4
Mar-
15
Jun-1
5
Sep-1
5
Dec-1
5
DII Holding % (Market cap) FII Holding % (Market cap)
DII's activity has started
uptredning in last 2 years
Page 33
STRATEGY Chitra Katha India market cap to GDP is still hovering around 10 year avg whereas Midcaps valuations are coming off peak
Sensex 12 month forward PE is trading at around 10Y average
Source: Bloomberg
Nifty 12 month forward PE is hovering around 10 year average
Source: Bloomberg
India market cap to GDP below its average since 2006- 64% (Current)
Source: Bloomberg, Spark Capital Research
BSE Mid caps 12 month forward PE is trading above +1sd
Source: Bloomberg, Spark Capital Research
15.0
17.1
12.9
80
120
160
200
240
280
320
8
10
12
14
16
18
20
22
Dec-0
5
Jul-
06
Feb-0
7
Sep
-07
Ap
r-08
No
v-0
8
Jun
-09
Jan
-10
Aug
-10
Mar-
11
Oct-
11
May-1
2
Dec-1
2
Jul-
13
Feb-1
4
Sep
-14
Ap
r-15
No
v-1
5
Sensex PE Avg +1sd -1sd Price (Index)
12.4
15.5
9.3
4
6
8
10
12
14
16
18
20
Dec-0
5
Jul-
06
Feb-0
7
Sep
-07
Ap
r-08
No
v-0
8
Jun
-09
Jan
-10
Aug
-10
Mar-
11
Oct-
11
May-1
2
Dec-1
2
Jul-
13
Feb-1
4
Sep
-14
Ap
r-15
No
v-1
5
BSE Midcaps PE Avg +1sd -1sd
88
147
49
98
59 49
81
64
40
60
80
100
120
140
160
Dec-0
5
Jul-
06
Feb-0
7
Sep
-07
Ap
r-08
No
v-0
8
Jun
-09
Jan
-10
Aug
-10
Mar-
11
Oct-
11
May-1
2
Dec-1
2
Jul-
13
Feb-1
4
Sep
-14
Ap
r-15
No
v-1
5
India Mkt cap to GDP Avg
14.5
16.4
12.6
80
120
160
200
240
280
320
8
10
12
14
16
18
20
22
Dec-0
5
Jul-
06
Feb-0
7
Sep
-07
Ap
r-08
No
v-0
8
Jun
-09
Jan
-10
Aug
-10
Mar-
11
Oct-
11
May-1
2
Dec-1
2
Jul-
13
Feb-1
4
Sep
-14
Ap
r-15
No
v-1
5
Nifty PE Avg +1sd -1sd Price (Index)
Macro Indicators: Market and Sector valuations
Page 34
STRATEGY Chitra Katha
Sensex 12 month forward PB falls below average in last quarter
Source: Bloomberg
Nifty 12 month forward PB is trading below average levels
Source: Bloomberg
Nifty Expected average return chart based on 12 month forward PE
Source: Bloomberg, Spark Capital Research
Nifty delivered 8% average annual return when trading in current range of valuations historically
Sensex 12 month forward implied ROE is below at -1sd level
Source: Bloomberg, Spark Capital Research
2.6
3.2
2.1
1.5
2.0
2.5
3.0
3.5
4.0
4.5
Dec-0
5
Ap
r-06
Aug
-06
Dec-0
6A
pr-
07
Aug
-07
Dec-0
7
Ap
r-08
Aug
-08
Dec-0
8
Ap
r-09
Aug
-09
Dec-0
9
Ap
r-10
Aug
-10
Dec-1
0
Ap
r-11
Aug
-11
Dec-1
1
Ap
r-12
Aug
-12
Dec-1
2
Ap
r-13
Aug
-13
Dec-1
3
Ap
r-14
Aug
-14
Dec-1
4
Ap
r-15
Aug
-15
Dec-1
5
Sensex PB Avg +1sd -1sd
2.5
3.0
2.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
Dec-0
5A
pr-
06
Aug
-06
Dec-0
6A
pr-
07
Aug
-07
Dec-0
7
Ap
r-08
Aug
-08
Dec-0
8A
pr-
09
Aug
-09
Dec-0
9A
pr-
10
Aug
-10
Dec-1
0A
pr-
11
Aug
-11
Dec-1
1
Ap
r-12
Aug
-12
Dec-1
2A
pr-
13
Aug
-13
Dec-1
3A
pr-
14
Aug
-14
Dec-1
4A
pr-
15
Aug
-15
Dec-1
5
Nifty PB Avg +1sd -1sd
17.3
19.2
15.5
14
15
16
17
18
19
20
21
22
Dec-0
5A
pr-
06
Aug
-06
Dec-0
6A
pr-
07
Aug
-07
Dec-0
7A
pr-
08
Aug
-08
Dec-0
8A
pr-
09
Aug
-09
Dec-0
9A
pr-
10
Aug
-10
Dec-1
0A
pr-
11
Aug
-11
Dec-1
1A
pr-
12
Aug
-12
Dec-1
2A
pr-
13
Aug
-13
Dec-1
3A
pr-
14
Aug
-14
Dec-1
4A
pr-
15
Aug
-15
Dec-1
5
Sensex ROE Avg +1sd -1sd
15.9
9.1 7.1
1.7
(4.1)
33.5
21.0
7.7 5.7
(8.3)(15)
(10)
(5)
0
5
10
15
20
25
30
35
40
<13x 13x -14x 14x -15.5x 15.5x -16.5x >16.5x
6M forward return 12M forward return Hit rate
Macro Indicators: Market and Sector valuations
Page 35
STRATEGY Chitra Katha
BSE Bankex index saw significant derating due to persistent NPA issues for PSU banks
BSE Auto- 12 month forward PE trend
Source: Bloomberg
BSE Bankex- 12 month forward PB trend
Source: Bloomberg
BSE Cap gds- 12 month forward PE trend
Source: Bloomberg
BSE Cons durable: 12 month forward PE
Source: Bloomberg
BSE FMCG- 12 month forward PE trend
Source: Bloomberg
BSE Healthcare-12 month forward PE trend
Source: Bloomberg
12.7
15.9
9.6
5
7
9
11
13
15
17
19
21
23
Dec-0
5
Sep
-06
Jun
-07
Mar-
08
Dec-0
8
Sep
-09
Jun
-10
Mar-
11
Dec-1
1
Sep
-12
Jun
-13
Mar-
14
Dec-1
4
Sep
-15
Auto PE(x) Avg
+1sd -1sd
1.8
2.2
1.5
1.0
1.2
1.4
1.6
1.8
2.0
2.2
2.4
2.6
Dec-0
5
Sep
-06
Jun
-07
Mar-
08
Dec-0
8
Sep
-09
Jun
-10
Mar-
11
Dec-1
1
Sep
-12
Jun
-13
Mar-
14
Dec-1
4
Sep
-15
Bankex PB Avg
+1sd -1sd
20.1
25.6
14.5
5
10
15
20
25
30
35
40
Dec-0
5
Sep
-06
Jun
-07
Mar-
08
Dec-0
8
Sep
-09
Jun
-10
Mar-
11
Dec-1
1
Sep
-12
Jun
-13
Mar-
14
Dec-1
4
Sep
-15
Cap gds PE(x) Avg
+1sd -1sd
22.4
30.1
14.7
5
10
15
20
25
30
35
40
45
Dec-0
5
Sep
-06
Jun
-07
Mar-
08
Dec-0
8
Sep
-09
Jun
-10
Mar-
11
Dec-1
1
Sep
-12
Jun
-13
Mar-
14
Dec-1
4
Sep
-15
Cons durables PE(x)Avg+1sd-1sd
24.5
28.6
20.5
15
17
19
21
23
25
27
29
31
33
35
Dec-0
5
Sep
-06
Jun
-07
Mar-
08
Dec-0
8
Sep
-09
Jun
-10
Mar-
11
Dec-1
1
Sep
-12
Jun
-13
Mar-
14
Dec-1
4
Sep
-15
FMCG PE(x) Avg
+1sd -1sd
19.5
23.0
16.0
10
12
14
16
18
20
22
24
26
28
Dec-0
5
Sep
-06
Jun
-07
Mar-
08
Dec-0
8
Sep
-09
Jun
-10
Mar-
11
Dec-1
1
Sep
-12
Jun
-13
Mar-
14
Dec-1
4
Sep
-15
Healthcare PE(x) Avg
+1sd -1sd
Macro Indicators: Market and Sector valuations
Page 36
STRATEGY Chitra Katha
BSE IT- 12 month forward PE trend
Source: Bloomberg
BSE IT trades at below its 10 year average due to muted US$ dollar revenue growth
BSE Oil & Gas- 12 month forward PE trend
Source: Bloomberg
BSE Power- 12 month forward PE trend
Source: Bloomberg
BSE Realty- 12 month forward PE trend
Source: Bloomberg
BSE PSU- 12 month forward PE trend
Source: Bloomberg
17.7
21.1
14.3
8
10
12
14
16
18
20
22
24
26
Dec
-05
Sep-
06
Jun-
07
Mar
-08
Dec
-08
Sep-
09
Jun-
10
Mar
-11
Dec
-11
Sep-
12
Jun-
13
Mar
-14
Dec
-14
Sep-
15
IT Avg +1sd -1sd
11.6
13.8
9.3
6
8
10
12
14
16
18
20
Dec
-05
Sep-
06
Jun-
07
Mar
-08
Dec
-08
Sep-
09
Jun-
10
Mar
-11
Dec
-11
Sep-
12
Jun-
13
Mar
-14
Dec
-14
Sep-
15
Oil & Gas PE(x) Avg
+1sd -1sd
15.7
20.6
10.9
10
12
14
16
18
20
22
24
26
28
30
Dec-0
7
May-0
8
Oct-
08
Mar-
09
Aug
-09
Jan
-10
Jun
-10
No
v-1
0
Ap
r-11
Sep
-11
Feb-1
2
Jul-
12
Dec-1
2
May-1
3
Oct-
13
Mar-
14
Aug
-14
Jan
-15
Jun
-15
No
v-1
5
Power PE(x) Avg+1sd -1sd
13.0
17.5
8.6
4
6
8
10
12
14
16
18
20
22
24
26
Dec-0
7
Jun
-08
Dec-0
8
Jun
-09
Dec-0
9
Jun
-10
Dec-1
0
Jun
-11
Dec-1
1
Jun
-12
Dec-1
2
Jun
-13
Dec-1
3
Jun
-14
Dec-1
4
Jun
-15
Dec-1
5
Realty PE(x) Avg+1sd -1sd
10.0
11.5
8.5
6
7
8
9
10
11
12
13
14
Dec-0
9
Ap
r-10
Aug
-10
Dec-1
0
Ap
r-11
Aug
-11
Dec-1
1
Ap
r-12
Aug
-12
Dec-1
2
Ap
r-13
Aug
-13
Dec-1
3
Ap
r-14
Aug
-14
Dec-1
4
Ap
r-15
Aug
-15
Dec-1
5
PSU PE(x) Avg+1sd -1sd
Macro Indicators: Market and Sector valuations
Page 37
Chitra Katha
Sensex EPS trend (Index to 100)
Source: Bloomberg
Nifty EPS trend (Index to 100)
Source: Bloomberg
Sensex and Nifty FY17 EPS is downgraded by 20% in last 12 months
75
80
85
90
95
100
105
110
Ap
r-13
Jun
-13
Aug
-13
Oct-
13
Dec-1
3
Feb-1
4
Ap
r-14
Jun
-14
Aug
-14
Oct-
14
Dec-1
4
Feb-1
5
Ap
r-15
Jun
-15
Aug
-15
Oct-
15
Dec-1
5
Feb-1
6
FY15 FY16 FY17
75
80
85
90
95
100
105
110
Ap
r-13
Jun
-13
Aug
-13
Oct-
13
Dec-1
3
Feb-1
4
Ap
r-14
Jun
-14
Aug
-14
Oct-
14
Dec-1
4
Feb-1
5
Ap
r-15
Jun
-15
Aug
-15
Oct-
15
Dec-1
5
Feb-1
6
FY15 FY16 FY17
Nifty stocks EPS (FY16-17) revision
Source: Bloomberg
Macro Indicators: Earning Revisions
Average EPS revision (FY1, FY2) %
Company name Sector Mcap (Rs mn) 1M 3 M 6M
BPCL Oil & Gas 5,86,349 2.5 7.6 12.0
Reliance Industries Oil & Gas 33,06,536 0.5 1.4 2.3
Infosys IT 26,14,162 0.1 1.0 0.6
Power Grid Power 7,26,929 0.0 1.7 0.2
Tata Power Power 1,58,897 0.0 1.8 0.0
M&M Auto 7,48,447 -0.1 4.3 0.0
Zee Entertainment Media 3,71,021 0.0 -2.1 -0.1
Hero MotoCorp Auto 5,61,731 0.3 -0.4 -0.2
Adani Port and SEZ Shipping 4,72,695 -0.3 -1.7 -0.2
NTPC Power 10,49,648 -0.1 -0.2 -0.3
Asian Paints Materials 8,48,506 0.0 1.7 -0.5
ITC FMCG 25,44,109 0.0 -1.3 -0.6
Tech Mahindra IT 4,45,428 0.1 -2.0 -0.8
IndusInd Bank Banks 5,46,419 -0.1 -1.6 -1.1
Yes Bank Banks 3,40,876 -0.1 -0.9 -1.1
HDFC Bank Banks 25,93,540 0.0 -1.0 -1.2
Wipro IT 13,17,338 0.0 -1.7 -1.2
Kotak Mahindra Bank Banks 11,72,633 0.8 -3.0 -1.3
Idea Cellular Telecom 3,56,806 -0.2 -16.9 -1.7
Sun Pharma Pharma 20,29,183 0.1 1.2 -1.8
Hindustan Unilever FMCG 18,19,383 -0.1 -3.0 -1.9
Cipla/India Pharma 4,21,812 -0.3 -4.8 -2.1
HDFC Banks 17,55,188 -0.4 -2.7 -2.3
Coal India Energy 18,67,433 -0.1 -3.3 -2.3
Bharti Airtel Telecom 13,70,708 -0.1 -8.2 -2.4
TCS IT 45,90,900 0.0 -1.0 -2.4
HCL Tech IT 11,44,741 0.0 -1.0 -2.5
ICICI Bank Banks 12,86,854 -0.2 -8.8 -2.5
Axis Bank Banks 9,97,388 0.0 -4.9 -2.8
GAIL India Power 4,32,107 0.0 4.5 -3.0
Ambuja Cements Materials 3,17,984 0.0 -20.3 -3.6
Bajaj Auto Auto 6,59,308 -0.9 -3.4 -3.8
Maruti Suzuki Auto 11,03,967 8.3 -3.1 -4.1
Hindalco Industries Materials 1,73,252 -0.2 -26.6 -4.1
Lupin Pharma 7,76,267 -0.3 -3.0 -5.8
BHEL Cap gds 2,59,813 0.0 -36.4 -6.0
SBI Banks 14,38,443 0.0 -30.5 -7.5
Vedanta Materials 2,61,190 0.3 -42.3 -8.7
ONGC Energy 17,74,409 -1.5 -25.1 -8.8
Tata Motors Auto 11,75,218 -0.1 -2.7 -10.4
Cairn India Energy 2,80,854 -1.9 -46.1 -10.9
ACC Materials 2,32,823 -1.0 -6.3 -12.2
PNB Banks 1,63,568 -0.2 -46.5 -12.3
L&T Cap gds 10,99,844 -0.3 -8.9 -13.3
Grasim Industries Materials 3,31,430 0.7 0.4 -16.9
Dr Reddy's Labs Pharma 5,34,348 -0.3 -5.4 -19.1
Bank of Baroda Banks 3,29,956 -1.7 -39.8 -19.6
Tata Steel Materials 2,91,802 0.0 -25.9 -20.3
Ultratech Cement Materials 8,20,415 0.0 -14.4 -23.1
Page 38
Chitra Katha
Nifty quarterly PAT growth is well below average
Source: Bloomberg
Nifty posted negative PAT growth in 3QFY16 due to Banks and Metals sector
Fundamentals Data
Nifty constituents - Quarterly sales growth excluding Fin and O&G at 5% in
Q316
Source: Bloomberg
Lowest PAT as % of GDP at 3.4% in FY15
Source: Bloomberg
3.2
3.9 4.0
4.8
5.5
4.3
4.9 4.9
4.4
4.03.8
3.4
2.0
2.5
3.0
3.5
4.0
4.5
5.0
5.5
6.0
FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15
BSE 500 PAT as % GDP Average
Average since 2004 : 4.3
Nifty constituents – Margins excluding Fin and O&G at 13.2% in Q316
Source: Bloomberg
24
18 19
15
7 8
7
15
18
13
17
8
5
1 1
4 5
0
5
10
15
20
25
Q3F
Y12
Q4F
Y12
Q1F
Y13
Q2F
Y13
Q3F
Y13
Q4F
Y13
Q1F
Y14
Q2F
Y14
Q3F
Y14
Q4F
Y14
Q1F
Y15
Q2F
Y15
Q3F
Y15
Q4F
Y15
Q1F
Y16
Q2F
Y16
Q3F
Y16
Sa
les
Yo
Y g
row
th %
Nifty ex fin ex O&G
18
3
(5)
14
(5) (7)
6
23
40
19
30
11
(1)
(26)
(9) (4) (6)
-30
-20
-10
0
10
20
30
40
50
Q3F
Y12
Q4F
Y12
Q1F
Y13
Q2F
Y13
Q3F
Y13
Q4F
Y13
Q1F
Y14
Q2F
Y14
Q3F
Y14
Q4F
Y14
Q1F
Y15
Q2F
Y15
Q3F
Y15
Q4F
Y15
Q1F
Y16
Q2F
Y16
Q3F
Y16
Nifty ex fin ex O&G
13.8
14.4 14.0
13.6
13.0
14.0 13.9 13.8 14.3 14.5
15.0 14.5
14.2
13.0
14.2
13.6 13.3
10
11
12
13
14
15
16
Q3F
Y12
Q4F
Y12
Q1F
Y13
Q2F
Y13
Q3F
Y13
Q4F
Y13
Q1F
Y14
Q2F
Y14
Q3F
Y14
Q4F
Y14
Q1F
Y15
Q2F
Y15
Q3F
Y15
Q4F
Y15
Q1F
Y16
Q2F
Y16
Q3F
Y16
Eb
it m
arg
ins
%
Nifty ex fin ex O&G
Page 39
Chitra Katha Fundamentals Data
BSE 200- Employee cost in upward trend since FY12
Source: Bloomberg
BSE 200 ex financials- EBIT interest cover at its trough levels
Source: Bloomberg
BSE 200 ex financials- Inventory and Receivables as % of sales
Source: Bloomberg
BSE 200 ex financials- Capex to sales should pick up with government
expenditure gaining momentum
Source: Bloomberg
7.4
7.8 7.9
8.3 8.2
8.8 8.9
8.7 8.8
8.2 8.4
8.9
9.6
7.0
7.5
8.0
8.5
9.0
9.5
10.0
FY
03
FY
04
FY
05
FY
06
FY
07
FY
08
FY
09
FY
10
FY
11
FY
12
FY
13
FY
14
FY
15
10.8
9.5 9.6 9.79.4
11.3
9.910.3
9.9 10.19.8 9.6
10.3
12.8
12.0 12.2
13.8
14.1
16.2 13.7
15.1
14.2
13.4 12.7
12.3 12.1
8.0
9.0
10.0
11.0
12.0
13.0
14.0
15.0
16.0
17.0
FY
03
FY
04
FY
05
FY
06
FY
07
FY
08
FY
09
FY
10
FY
11
FY
12
FY
13
FY
14
FY
15
Receivables as % of sales Inventory as % of sales
3.8
5.2
8.4
9.99.1
6.8
5.6 5.5
6.7
5.6
4.44.1 3.9
2
3
4
5
6
7
8
9
10
FY
03
FY
04
FY
05
FY
06
FY
07
FY
08
FY
09
FY
10
FY
11
FY
12
FY
13
FY
14
FY
15
6.5
7.2
9.19.7
13.7
14.9
12.8
12.1
13.2
10.39.8 9.7
9.3
6
7
8
9
10
11
12
13
14
15
16
FY
03
FY
04
FY
05
FY
06
FY
07
FY
08
FY
09
FY
10
FY
11
FY
12
FY
13
FY
14
FY
15
EBIT interest cover at its lowest due to increased capital cost and muted earnings
Page 40
Chitra Katha
Gearing is continuously on rise while ROE’s are bottoming out
Fundamentals Data
Indian banking sector- NPA and restructured assets trend
Source: Bloomberg
BSE 200 total debt to equity stands at 75%.
Note: Ex-financials universe. Source: Bloomberg
BSE 200 ex financials- Dissecting return on equity into key drivers
Source: Bloomberg, Spark Capital Research
10.4%
8.8%
7.2%
4.9%
3.3%
2.5% 2.3% 2.3% 2.4% 2.2% 2.8%3.2%
4.1%
4.8%2.5%
3.9%3.2%
4.2%
5.2%
5.9%
6.2%
0%
2%
4%
6%
8%
10%
12%
FY
02
FY
03
FY
04
FY
05
FY
06
FY
07
FY
08
FY
09
FY
10
FY
11
FY
12
FY
13
FY
14
FY
15P
NPA (%) Restructured Assets (%)
26.9 26.2
18.0 18.2 17.8
16.1 15.1 14.9
12.9
15.1 14.7
10.7 12.1 11.5
9.7 9.0 8.9 8.3
2.1 2.2 2.3
2.2 2.2 2.3 2.3 2.4 2.4
0.83 0.82
0.740.66
0.700.72 0.71
0.710.64
0.60
0.65
0.70
0.75
0.80
0.85
0.90
0.95
1.00
1.05
1.10
0
5
10
15
20
25
30
FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15
ROE PAT margin Leverage Asset turnover (RHS)
Indian companies return on equity at its trough levels due to sluggish
demand and high inflation leading to muted earnings growth
32 33 31 33 34 32 31 31 32 33
2023
3438
27 32 3944 45 42
0
10
20
30
40
50
60
70
80
90
FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15
Net debt to Equity Cash to Equity Total debt to Equity
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Chitra Katha
March and April 2016
Macro Release Calendar
Source: Bloomberg, Spark Capital Research
Date Time Event For the period of Survey Actual Prior Revised
Macro
Ev
en
ts S
o F
ar
02/15/2016 12:00 Wholesale Prices YoY Jan -0.13% -0.90% -0.73% -1.06%
02/15/2016 18:42 Trade Balance Jan -$9941.5m -$7638.9m -$11664.0m --
02/15/2016 18:42 Imports YoY Jan -- -11.00% -3.90% --
02/15/2016 18:42 Exports YoY Jan -- -13.60% -14.70% --
02/29/2016 17:13 Eight Infrastructure Industries Jan -- 2.90% 0.90% --
03/01/2016 10:30 Nikkei India PMI Mfg Feb -- 51.1 51.1 --
03/03/2016 10:30 Nikkei India PMI Services Feb -- 51.4 54.3 --
03/03/2016 10:30 Nikkei India PMI Composite Feb -- 51.2 53.3 --
03/10/2016 10:30 Local Car Sales Feb -- 164469 168303 --
03/11/2016 17:30 Industrial Production YoY Jan -0.50% -1.50% -1.30% -1.20%
03/14/2016 12:00 Wholesale Prices YoY Feb -0.19% -0.91% -0.90% --
03/14/2016 17:30 CPI YoY Feb 5.52% 5.18% 5.69% --
Up
co
min
g M
acro
Ev
en
ts
03/14/2016 03/31 BoP Current Account Balance 4Q -$3.00b -- -$8.21b --
03/14/2016 03/18 Trade Balance Feb -$6800.0m -- -$7638.9m --
03/14/2016 03/18 Imports YoY Feb -- -- -11.00% --
03/14/2016 03/18 Exports YoY Feb -- -- -13.60% --
03/28/2016 03/31 Eight Infrastructure Industries Feb -- -- 2.90% --
03/31/2016 Fiscal Deficit INR Crore Feb -- -- 44096 --
04/04/2016 10:30 Nikkei India PMI Mfg Mar -- -- 51.1 --
04/05/2016 11:00 RBI Cash Reserve Ratio Apr-05 -- -- 4.00% --
04/05/2016 11:00 RBI Repurchase Rate Apr-05 -- -- 6.75% --
04/05/2016 11:00 RBI Reverse Repo Rate Apr-05 -- -- 5.75% --
04/06/2016 10:30 Nikkei India PMI Services Mar -- -- 51.4 --
04/06/2016 10:30 Nikkei India PMI Composite Mar -- -- 51.2 --
04/08/2016 04/18 Trade Balance Mar -- -- -- --
04/08/2016 04/12 Local Car Sales Mar -- -- 164469 --
04/08/2016 04/18 Imports YoY Mar -- -- -- --
04/08/2016 04/18 Exports YoY Mar -- -- -- --
04/12/2016 17:30 CPI YoY Mar -- -- 5.18% --
04/12/2016 17:30 Industrial Production YoY Feb -- -- -1.50% --
04/14/2016 12:00 Wholesale Prices YoY Mar -- -- -0.91% --
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Chitra Katha
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Chitra Katha
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