spark chitra katha
TRANSCRIPT
Page 1
Spark Chitra Katha
A story told through charts...
Spark Chitra Katha
Market data
BSE Sensex 27,932
NSE Nifty 8,454
Date July 15, 2015
Performance (%)
1m 3m 12m
BSE200 6% -4% 17%
Sensex 6% -4% 12%
‘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.
Households are shifting from physical to financial savings with a clear preference to equity
Though overall household savings declined to 18.2% of GDP in FY14 (20.2% in FY13), financial savings have inched
up to 11.3% of GDP (10.3% in FY13) while physical savings have declined sharply to 10.7% of GDP (12.9% in FY13).
The trend has further strengthened in FY15 as number of new demat accounts have doubled to 1.6m in FY15, from
0.8m new demat accounts opened in FY14. Interestingly, MFs have received Rs. 950bn or $15bn inflows in equity in
the last 12 months, which is equal to the cumulative MFs equity inflows of the previous 10 years (Sep’04-Jun’14). Also,
the domestic institutional investors (DIIs) invested $5bn in the Indian equity market in Jun’15 quarter, the highest in
recent years.
Industrial credit growth slows to a decadal low while services sector credit growth has improved in the last two
months
Industrial credit growth falls to over a decade low of 5.2% in May’15, much lower than the bottom of the previous down
cycle of 14.2% in Nov’09. Credit growth in commercial real estate has also slowed to near 3 year low of 7.5% in
May’15. Petroleum, mining, chemicals, textiles and cement are the major sectors, which have seen sharp fall in credit
growth in the last 12 months. On the other hand, services sector credit growth has inched up to 9.1% in May’15, after
hitting a low of 5.3% in Oct’14, mainly led by pick up in trade credit.
After a good spell in June, rainfall weakens in early July; water level in reservoirs remain above average
While overall rainfall in Jun’15 was16% above normal, it has weakened in the first half of July in all regions except the
north-west. As on 13 Jul’15, India has registered an overall deficit rainfall of 3%. June accounts for ~20% of the
monsoon rainfall while July, August and September account for 32%, 29% and 19% respectively. However, the water
storage position is better than the storage position of last year (up 31%) and the average of last ten years (up 19%).
Broader index trading around average but Healthcare and FMCG still at peak
Sensex PB at 2.7x is still hovering near average of 2.6x. Even current India’s market cap to GDP of 72% is lower than
average of approximately 80%. But on sector level valuations, FMCG and healthcare are trading at almost their peak
price to earnings ratio, so any negative surprises on quarterly earnings numbers may weigh down the performance.
Bottoming out of fundamentals
Indian corporates had the worst quarter in 4Q 15 with negative sales and PAT growth. Margins and asset turnover trend
have suppressed the ROE’s of corporate. With frontloading of government spending in FY16 and the resultant direct
and indirect impact of the same on economic activities, the earnings upgrade cycle is likely to kick in from 2H FY16.
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
0%
5%
10%
15%
20%
25%
Jul-14 Oct-14 Jan-15 Apr-15 Jul-15
Sensex BSE 200
Page 2
Spark Chitra Katha
Segment-wise contribution to growth, ppt
Source: CSO, Spark Capital Research
Pick up in consumption and investment
Source: CSO, Spark Capital Research
Govt. cuts spending to curb fiscal deficit
Source: CSO, Spark Capital Research
Imports outpace exports in contraction
Source: CSO, Spark Capital Research
ICOR hints at efficient capital utilization
Source: CSO, Spark Capital Research
GDP growth in Q4FY15 improves on higher private consumption
Growth
GDP growth picks up in Q4FY15...
Source: CSO, Spark Capital Research
-7.2
27.6
-7.9 -15
-10
-5
0
5
10
15
20
25
30
Jun
-12
Sep
-12
Dec-1
2
Mar-
13
Jun
-13
Sep
-13
Dec-1
3
Mar-
14
Jun
-14
Sep
-14
Dec-1
4
Mar-
15
Govt. consumption (%, yoy)
14.1
-0.3 -8.2 -7.0
2.8
-8.7 -15
-10
-5
0
5
10
15
20
25
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
(%, yoy)
Exports of goods & services Imports of goods & services
4.9
4.8
4.3
3
4
5
6
7
8
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
Incremental Capital-Output Ratio (ICOR)
6.7 6.6
7.5
3
4
5
6
7
8
9
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
Real GDP growth (%, yoy)
3.9 3.6 4.02.5
4.4
-0.8
0.2
1.2
2.4
-0.8
-2.0
3.01.4
1.0 1.9
5.2
3.1
-0.9 -0.8
0.2
0.4
-3.3
2.7
1.51.8
Mar-14 Jun-14 Sep-14 Dec-14 Mar-15
C G I (X-M) E&O
7.0
4.2
7.9
-5.2
2.9
5.7
-6
-3
0
3
6
9
12
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
(%, yoy)
HH consumption Investment (GCF)
Page 3
Spark Chitra Katha
...so is the case with electricity production
Source: CSO, Spark Capital Research
IIP growth decelerates in May’15 low...
Source: CSO, Spark Capital Research
...led by weaker manufacturing production
Source: CSO, Spark Capital Research
Manufacturing PMI hints at weak growth
Source: CSO, Spark Capital Research
Mining production growth inches up
Source: CSO, Spark Capital Research
Segment-wise weight in IIP (%)
Source: CSO, Spark Capital Research
Industrial production growth decelerates in May’15 led by manufacturing sector...
Growth
Mining 14.16
Manufacturing
75.53
Electricity 10.32
5.6
3.42.7
-6
-3
0
3
6
May-1
4
Jun-1
4
Jul-14
Aug
-14
Sep
-14
Oct-
14
No
v-1
4
Dec-1
4
Jan-1
5
Feb
-15
Mar-
15
Ap
r-15
May-1
5
%, yo
y
Industrial Production Index (IIP)
5.9
2.9
-0.3
-1.1
2.7
-5.6
4.7
4.1
3.4
5.1
2.8
4.2
2.2
-8
-4
0
4
8
May-1
4
Jun-1
4
Jul-14
Aug
-14
Sep
-14
Oct-
14
No
v-1
4
Dec-1
4
Jan-1
5
Feb
-15
Mar-
15
Ap
r-15
May-1
5
%, yo
y
Manufacturing
54.5
51.3
44
47
50
53
56
59
62
Mar-
07
Dec-0
7
Sep
-08
Jun-0
9
Mar-
10
Dec-1
0
Sep
-11
Jun-1
2
Mar-
13
Dec-1
3
Sep
-14
Jun-1
5
India manufacturing PMI
2.5
4.8
0.1
1.2 0
.1
4.5
4.0
-1.7
-1.8
1.6
1.1
0.2
2.8
-4
-2
0
2
4
6
May-1
4
Jun-1
4
Jul-14
Aug
-14
Sep
-14
Oct-
14
No
v-1
4
Dec-1
4
Jan-1
5
Feb
-15
Mar-
15
Ap
r-15
May-1
5
%, yo
y
Mining
6.7
-0.5
6.0
-3
0
3
6
9
12
15
18M
ay-1
4
Jun-1
4
Jul-14
Aug
-14
Sep
-14
Oct-
14
No
v-1
4
Dec-1
4
Jan-1
5
Feb
-15
Mar-
15
Ap
r-15
May-1
5
%, yo
y
Electricity
Page 4
Spark Chitra Katha
Cap goods production weakens
Source: CSO, Spark Capital Research
Consumer goods production falls led by...
Source: CSO, Spark Capital Research
...both durables and non-durables prod
Source: CSO, Spark Capital Research
Basic goods production growth
Source: CSO, Spark Capital Research
Intermediate goods production growth
Source: CSO, Spark Capital Research
Segment-wise weight in IIP (%)
Source: CSO, Spark Capital Research
…capital goods and consumer goods production drag the IIP growth
Growth
4.6
-8.8 -5
.9
-6.2 -4.0
-18.2
-1.6
0.6
-1.9
4.9
-0.4
3.0
-1.6
-20
-15
-10
-5
0
5
10
May-1
4
Jun-1
4
Jul-14
Aug
-14
Sep
-14
Oct-
14
No
v-1
4
Dec-1
4
Jan-1
5
Feb
-15
Mar-
15
Ap
r-15
May-1
5
%, 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
4.2 2
3.3
-3.0
-10.0
12.3
-3.2
7.0 6.1
12.4
8.3
8.7 6.8
1.8
-20
-15
-10
-5
0
5
10
15
20
25
May-1
4
Jun-1
4
Jul-14
Aug
-14
Sep
-14
Oct-
14
No
v-1
4
Dec-1
4
Jan-1
5
Feb
-15
Mar-
15
Ap
r-15
May-1
5
%, yo
y
Capital Goods
3.6
1.3
-3.9
5.24.2
-0.1
-35
-30
-25
-20
-15
-10
-5
0
5
10
15
May-1
4
Jun-1
4
Jul-14
Aug
-14
Sep
-14
Oct-
14
No
v-1
4
Dec-1
4
Jan-1
5
Feb
-15
Mar-
15
Ap
r-15
May-1
5
%, yo
y
Durables Non Durables
7.5
2.6
6.4
0
2
4
6
8
10
12
May-1
4
Jun-1
4
Jul-14
Aug
-14
Sep
-14
Oct-
14
No
v-1
4
Dec-1
4
Jan-1
5
Feb
-15
Mar-
15
Ap
r-15
May-1
5
%, yo
y
Basic Goods
3.5
2.5
1.2
-4
-2
0
2
4
6M
ay-1
4
Jun-1
4
Jul-14
Aug
-14
Sep
-14
Oct-
14
No
v-1
4
Dec-1
4
Jan-1
5
Feb
-15
Mar-
15
Ap
r-15
May-1
5
%, yo
y
Intermediate Goods
Page 5
Spark Chitra Katha
Core sector production rebounds in May’15
Source: Ministry of Commerce and Industry
Electricity production growth
Source: Ministry of Commerce and Industry
Production growth of Natural Gas & Crude
Source: Ministry of Commerce and Industry
Fertilizer production growth
Source: Ministry of Commerce and Industry
Steel and cement production growth
Source: Ministry of Commerce and Industry
Coal and refinery production growth
Source: Ministry of Commerce and Industry
Growth Seven of the eight core infra-related sectors slip into expansion zone in May’15 versus merely two in Apr’15
6.7
-1.1
5.5
-2
0
2
4
6
8
10
12
14
16
May-1
4
Jun-1
4
Jul-14
Aug
-14
Sep
-14
Oct-
14
No
v-1
4
Dec-1
4
Jan-1
5
Feb
-15
Mar-
15
Ap
r-15
May-1
5
%, yo
y
Electricity
-0.3
-2.7
0.8
-2.2-3.5
-3.1
-10
-5
0
5
May-1
4
Jun-1
4
Jul-14
Aug
-14
Sep
-14
Oct-
14
No
v-1
4
Dec-1
4
Jan-1
5
Feb
-15
Mar-
15
Ap
r-15
May-1
5
%, yo
y
Crude Oil Natural Gas
3.3 2
.6
8.4
2.5
-5
0
5
10
15
20M
ay-1
4
Jun-1
4
Jul-14
Aug
-14
Sep
-14
Oct-
14
No
v-1
4
Dec-1
4
Jan-1
5
Feb
-15
Mar-
15
Ap
r-15
May-1
5
%, yo
y
Steel Cement
5.4 7
.9
7.8
-1.8 -2.9
7.8
-10
-5
0
5
10
15
20
May-1
4
Jun-1
4
Jul-14
Aug
-14
Sep
-14
Oct-
14
No
v-1
4
Dec-1
4
Jan-1
5
Feb
-15
Mar-
15
Ap
r-15
May-1
5
%, yo
y
Coal Ref inery Products
17.5
-1.1
-4.3 -4
.3
-11.6
-7.0
-2.8
-1.5
7.1
-0.4
5.2
-0.1
1.3
May-1
4
Jun-1
4
Jul-14
Aug
-14
Sep
-14
Oct-
14
No
v-1
4
Dec-1
4
Jan-1
5
Feb
-15
Mar-
15
Ap
r-15
May-1
5
%, yo
y
Fertilizers
5.6
1.4
-0.1
-0.4
4.4
-3
0
3
6
9
Ap
r-14
May-1
4
Jun-1
4
Jul-14
Aug
-14
Sep
-14
Oct-
14
No
v-1
4
Dec-1
4
Jan-1
5
Feb
-15
Mar-
15
Ap
r-15
May-1
5
%, yo
y
Eight core industries index
Page 6
Spark Chitra Katha
MHCV exports pick up sharply
Source: SIAM, Spark Capital Research
…LCV sales remain a major drag
Source: SIAM, Spark Capital Research
-12.5
-10.5
20.7
-20
-10
0
10
20
30
40
50
60
Jun-1
4
Jul-14
Aug
-14
Sep
-14
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
%, yo
y
LCV: Domestic sales MHCV: Domestic sales
6.5
13.6
47.2
-30-20-10
01020304050607080
Jun-1
4
Jul-14
Aug
-14
Sep
-14
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
%, yo
y
LCV exports MHCV exports
CV sales start losing momentum…
Source: SIAM, Spark Capital Research
Passenger vehicle exports take a hit
Source: SIAM, Spark Capital Research
Two wheeler sales inch up
Source: SIAM, Spark Capital Research
Three wheeler sales are down
Source: SIAM, Spark Capital Research
Auto sales: Losing steam again
Growth
-9.1
0.7
21.025.2
-20
-10
0
10
20
30
40
Jun-1
4
Jul-14
Aug
-14
Sep
-14
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
%, yo
y
CV: Domestic sales CV exports
11.2
-0.5
-21.7-30
-20
-10
0
10
20
30
40
Jun-1
4
Jul-14
Aug
-14
Sep
-14
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
%, yo
y
PV: Domestic sales PV exports
3.5
26.8
-20
-10
0
10
20
30
40Jun-1
4
Jul-14
Aug
-14
Sep
-14
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
%, yo
y
2-Wheeler sales: Domestic 2-Wheeler exports
-7.4
18.1
-40
-20
0
20
40
60
80
100
-20
-10
0
10
20
30
40
Jun-1
4
Jul-14
Aug
-14
Sep
-14
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
%, yo
y
3-Wheeler sales: Domestic 3-Wheeler exports
Page 7
Spark Chitra Katha
Cargo traffic growth holds up
Source: CEIC, Spark Capital Research
Lead indicators hint at pick up in economic activities albeit at a gradual pace
RBI’s survey shows upbeat urban consumer confidence
Source: RBI, Spark Capital Research
Real rural wage growth turns positive after nine months
Source: RBI Spark Capital Research
Growth
Near double digit increase in foreign tourist arrivals May’15
Source: CEIC, Spark Capital Research
0.4
9.2
-5
0
5
10
15
20
Feb
-10
May-1
0
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
Foreign Tourist Arrivals (yoy, %) 3-month moving average
4.5
-8
-6
-4
-2
0
2
4
6
8
10
Mar-
10
Jun-1
0
Sep
-10
Dec-1
0
Mar-
11
Jun-1
1
Sep
-11
Dec-1
1
Mar-
12
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
Cargo Traf f ic growth (ytd, %, yoy)
17.3
5.7
1.0
-5
0
5
10
15
20
25
Sep-0
5
Fe
b-0
6
Jul-06
Dec-0
6
May-0
7
Oct-
07
Mar-
08
Aug-0
8
Jan-0
9
Jun-0
9
Nov-0
9
Apr-
10
Sep-1
0
Fe
b-1
1
Jul-11
Dec-1
1
May-1
2
Oct-
12
Mar-
13
Aug-1
3
Jan-1
4
Jun-1
4
Nov-1
4
Apr-
15
Rural wage growth: Nominal ( % yoy) Rural wage growth:Real ( % yoy)
117
87
109
119
88
127
80
90
100
110
120
130
Dec-1
0
Fe
b-1
1
Apr-
11
Jun-1
1
Aug-1
1
Oct-
11
Dec-1
1
Fe
b-1
2
Apr-
12
Jun-1
2
Aug-1
2
Oct-
12
Dec-1
2
Fe
b-1
3
Apr-
13
Jun-1
3
Aug-1
3
Oct-
13
Dec-1
3
Fe
b-1
4
Apr-
14
Jun-1
4
Aug-1
4
Oct-
14
Dec-1
4
Fe
b-1
5
Consumer Confidence Survey: Current Situation Index
Consumer Confidence Survey: Future Expectations Index
Page 8
Spark 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
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
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
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
LPG (% YoY 3mma) Kerosene (% YoY 3mma)
Growth
Page 9
Spark Chitra Katha
Non-discretionary demand takes a hit while discretionary demand shows mixed signals
Cement Volume- No pick up in uptake since 1Q’15 growth trend
Source: Company sources
Consumer staples- Weak Volume growth since 1FY12
Source: Company sources
Consumer discretionary- Retail yet to see growth
Source: Company sources
India Pharma players- USA ANDA approvals pick up after Q315
Source: Company sources
-10%
-5%
0%
5%
10%
15%
20%
1Q
FY
12
2Q
FY
12
3Q
FY
12
4Q
FY
12
1Q
FY
13
2Q
FY
13
3Q
FY
13
4Q
FY
13
1Q
FY
14
2Q
FY
14
3Q
FY
14
4Q
FY
14
1Q
FY
15
2Q
FY
15
3Q
FY
15
4Q
FY
15
Top three players volume growth%
Regional players
0%
4%
8%
12%
16%
20%
1Q
FY
12
2Q
FY
12
3Q
FY
12
4Q
FY
12
1Q
FY
13
2Q
FY
13
3Q
FY
13
4Q
FY
13
1Q
FY
14
2Q
FY
14
3Q
FY
14
4Q
FY
14
1Q
FY
15
2Q
FY
15
3Q
FY
15
4Q
FY
15
Colgate Dabur Hindustan Unilever Marico
-25%
-20%
-15%
-10%
-5%
0%
5%
10%
15%
20%
25%
1Q
FY
12
2Q
FY
12
3Q
FY
12
4Q
FY
12
1Q
FY
13
2Q
FY
13
3Q
FY
13
4Q
FY
13
1Q
FY
14
2Q
FY
14
3Q
FY
14
4Q
FY
14
Titan-Watches Asian Paints- Decorative
Jubilant-SSSG Shoppers stop-SSSG
0
5
10
15
20
25
30
35
40
45
50
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
ANDA Approvals
Growth
Page 10
Spark Chitra Katha
Number of new demat accounts grew 100% in FY15 over FY14
Source: NSDL, Spark Capital Research
Growth
Household financial savings has turned around
Source: RBI
Last 12 months equity inflows of MFs at $15bn are equal to the
cumulative MFs equity inflows of the previous 10 years
Source: AMFI, Spark Capital Research
DIIs invested $5bn in equity in Jun’15 quarter, the highest in recent
years
Source: Bloomberg, Spark Capital Research
Households are shifting from physical to financial savings with a clear preference to equity
10.6
10.3
11.3
15.1
12.9
10.7
8.0
9.0
10.0
11.0
12.0
13.0
14.0
15.0
16.0
FY12 FY13 FY14
(% of GDP)
HH Financial savings HH Physical savings
1.0 1.1
0.8
1.6
FY12 FY13 FY14 FY15
New demat accounts (mn)
-4.4
0.5
-3.4 -3.5
-6.3
-1.3 -0.6
-4.7
-2.4 -2.7
-0.4
0.3
-0.9
5.0
-8.0
-6.0
-4.0
-2.0
0.0
2.0
4.0
6.0
Mar/
12
Jun/1
2
Sep/1
2
Dec/1
2
Mar/
13
Jun/1
3
Sep/1
3
Dec/1
3
Mar/
14
Jun/1
4
Sep/1
4
Dec/1
4
Mar/
15
Jun/1
5
DII Investment in Equity ($bn)
-100
-50
0
50
100
150
Jun/0
4
Dec/0
4
Jun/0
5
Dec/0
5
Jun/0
6
Dec/0
6
Jun/0
7
Dec/0
7
Jun/0
8
Dec/0
8
Jun/0
9
Dec/0
9
Jun/1
0
Dec/1
0
Jun/1
1
Dec/1
1
Jun/1
2
Dec/1
2
Jun/1
3
Dec/1
3
Jun/1
4
Dec/1
4
Jun/1
5
Net equity flows in MFs (Rs. bn)
Cumulative MF inflows in equity during Sep'04-Jun'14 = Rs. 950bn
(the same amount MFs received in last 12 months)
Rs 950
bn
Page 11
Spark Chitra Katha
Rainfall in South Peninsula is below normal while NW is in surplus
Source: IMD
Monsoon
Rainfall loses strength in the first week of July…
Source: IMD
…cumulative rainfall slips 3% below the long period average
Source: IMD
…but 19% higher water storage is a saving grace
Source: CWC Note: Data is as on 9-July’15
After a good spell in June, rainfall weakens in early July; water level in reservoirs remain above average
60%
41% 40% 37% 34%
19% 19% 16% 13% 13%
-18% -24%
This year's water storage vs. last 10 years avg. %
-12%
-8% -7%
-3%
26%
South Peninsula Central India East & North East India
India (total) North West India
Subdivision-wise rainfall distribution (% of LPA)
Note: Data is as on 13-July’15
Page 12
Spark Chitra Katha
CPI inflation inches up led by…
Source: CSO, Spark Capital Research
...rural inflation, at 6.1% in Jun’15…
Source: CSO, Spark Capital Research
…while urban inflation at 4.6%
Source: CSO, Spark Capital Research
Rural CPI inflation is marching ahead of urban
Food, Housing and Services have led the softening in inflation
Source: CSO, Spark Capital Research
Inflation
6.8
5.6
5.0 5.4
3
4
5
6
7
8
9
10
Jun-1
4
Jul-14
Aug
-14
Sep
-14
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
%, yo
y
CPI inf lation
7.4
5.5
6.1
3
4
5
6
7
8
9
10Jun-1
4
Jul-14
Aug
-14
Sep
-14
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
%, yo
y
CPI inf lation: Rural
6.1
4.4
4.6
3
4
5
6
7
8
9
Jun-1
4
Jul-14
Aug
-14
Sep
-14
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
%, yo
y
CPI inf lation: Urban
CPI inflation break-up
Jun-15 May-15 Jun-14
CPI (wt:100) 5.4 5.0 6.8
Core CPI (wt:47.3) 5.0 4.7 6.7
Food (wt:45.9) 5.7 5.1 7.3
Fuel (wt:6.8) 5.9 6.0 4.5
Clothing (wt:6.5) 6.3 6.0 8.2
Housing (wt:10.1) 4.5 4.6 6.8
Services (wt:28.3) 4.2 3.8 6.1
1.1 1.2 1.2 1.1 0.9 0.7 0.8 0.9 1.0 0.9 0.8 0.9 1.0
2.4 2.8 2.7 2.0
1.4 0.7
1.5 2.1 2.1 2.1 1.9 1.8 1.9
0.3 0.3 0.3
0.2 0.2
0.2 0.2
0.3 0.4 0.4 0.4 0.4 0.4
0.6 0.6 0.6
0.5 0.5
0.4 0.4
0.5 0.5 0.5 0.4 0.4 0.4
0.7 0.7 0.7
0.6
0.5
0.4
0.5
0.6 0.6 0.5 0.5 0.5 0.5
1.7 1.8 1.6
1.2
1.1
0.8
0.9
0.9 0.9 0.9 0.9 1.1
1.2
6.8
5.4
0
1
2
3
4
5
6
7
8
9
Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15
Contribution to CPI inflation, ppt
MSP linked food (wt:16.9%) Non-MSP linked food (32:5%) Fuel & Light
Clothing & Footwear Housing Services
CPI
Page 13
Spark Chitra Katha
WPI inflation remains in negative zone…
Source: Office of the Economic Adviser
…led by lower oil prices
Source: Office of the Economic Adviser
Manufactured index up 0.2% m/m
Source: Office of the Economic Adviser
WPI Inflation: Sharp fall in fuel inflation and weak pricing power of corporates keep WPI inflation in –ve zone
Contribution to inflation: Fuel index pulls WPI inflation into –ve zone
Source: Office of the Economic Adviser, Spark Capital Research
Inflation
4.1
-0.9
5.7
-2.4-3
-2
-1
0
1
2
3
4
5
6
7
Jun-1
4
Jul-14
Aug
-14
Sep
-14
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
%, yo
y
Core WPI WPI inf lation
3.8 2.9
-10.5
-10.0
-20
-15
-10
-5
0
5
10
15
Jun-1
4
Jul-14
Aug
-14
Sep
-14
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
%, yo
y
Food inf lation Fuel inf lation
0.2
0.4
0.1
-0.1
-0.1
-0.4
-0.3
-0.1
-0.3
-0.1
0.0
0.1
0.1
Jun-1
4
Jul-14
Aug
-14
Sep
-14
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
%, m
om
Manufactured products index (%, mom)
2.8 2.3
0.4
1.8 1.7
-1.9 -1.8
1.7 2.2
0.6
-0.4
-2.4 D
ec-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
ppt
Primary Articles Fuel & Power Manufactured WPI
WPI Inflation slips into negative territory
(%, yoy) Weight Jun'14 May'15 Jun'15
WPI (A+B+C) 100.0 5.7 -2.4 -2.4
Primary (i+ii = A) 20.1 7.0 -0.8 -0.8
Food (i) 14.3 8.3 3.8 2.9
Non-food (ii) 5.8 3.9 -11.8 -9.8
Fuel (B) 14.9 9.0 -10.5 -10.0
Manufactured (iii + iv = C) 65.0 3.9 -0.6 -0.8
Food products (iii) 10.0 3.3 -0.6 -0.1
Core WPI (iv) 55.0 4.1 -0.6 -0.9
Page 14
Spark Chitra Katha
RBI cuts repo rate in Jun’15 (Total 75bps)
Source: RBI, Spark Capital Research
No change in SLR and CRR
Source: RBI, Spark Capital Research
Banks’ base rate down 25bps since Apr’15
Source: CEIC, Spark Capital Research
Liquidity situation
Source: RBI, Spark Capital Research
10-year G-sec yields soften
Source: CEIC, Spark Capital Research
Yield curve
Source: Bloomberg, Spark Capital Research
RBI cuts repo rate by 25pbs in Jun’15; Transmission of monetary easing taking place but at a gradual pace
Interest Rates
7.25
6.25
8.25
6
7
8
9
10
11
Fe
b-1
3
Ap
r-1
3
Ju
n-1
3
Au
g-1
3
Oct-
13
De
c-1
3
Fe
b-1
4
Ap
r-1
4
Ju
n-1
4
Au
g-1
4
Oct-
14
De
c-1
4
Fe
b-1
5
Ap
r-1
5
Ju
n-1
5
%
Repo Reverse Repo MSF rate
4.0
4.0
23.0
21.5021.0
21.5
22.0
22.5
23.0
23.5
3.0
3.5
4.0
4.5
5.0
Fe
b-1
3
Ap
r-1
3
Ju
n-1
3
Au
g-1
3
Oct-
13
De
c-1
3
Fe
b-1
4
Ap
r-1
4
Ju
n-1
4
Au
g-1
4
Oct-
14
De
c-1
4
Fe
b-1
5
Ap
r-1
5
Ju
n-1
5
CRR (%) SLR (%) - RHS
9.98
10.13
9.88
9.8
9.9
10.0
10.1
10.2
Feb
-13
Ap
r-13
Jun-1
3
Aug
-13
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
Base Rate: Five Major Banks (%)
14
-300-250-200-150-100-50
050
100150200250
Ap
r-14
Jun-1
4
Aug
-14
Oct-
14
Dec-1
4
Feb
-15
May-1
5
Jul-15
LAF + MSF (7D moving avg.) - Rs. bn
7.9
6.0
7.0
8.0
9.0
10.0
Jan/1
0
Jun/1
0
Nov/1
0
Apr/
11
Sep/1
1
Fe
b/1
2
Jul/12
Dec/1
2
May/1
3
Oct/
13
Mar/
14
Aug/1
4
Jan/1
5
Jun/1
5
India 10 year Gsec yield (%)
8
8
9
9
10
3M 6M 1Y 2Y 3Y 4Y 5Y 7Y 9Y 10Y 15Y
%
Current 1M back 6M back 1Y back
Page 15
Spark Chitra Katha
Deposit growth inches up
Source: RBI, Spark Capital Research
CD ratio marginally up at ~76
Source: RBI, Spark Capital Research
Investment deposit ration at a 2 year high
Source: RBI, Spark Capital Research
Forex reserves at a historic high
Source: RBI, Spark Capital Research
Import covers at ~11months
Source: RBI, Spark Capital Research
RBI continues to intervene in the forex mkt
Source: RBI, Spark Capital Research
Deposit growth is gradually improving while credit growth remains in single digit
Monetary Conditions
11.4
9.38
9
10
11
12
13
14
15
27-J
un-1
4
25-J
ul-14
22-A
ug
-14
19-S
ep
-14
17-O
ct-
14
14-N
ov-1
4
12-D
ec-1
4
9-J
an-1
5
6-F
eb
-15
6-M
ar-
15
3-A
pr-
15
1-M
ay-1
5
29-M
ay-1
5
26-J
un-1
5
%, yo
y
Deposit growth Credit growth
75.7
75
76
77
78
27-J
un-1
4
25-J
ul-14
22-A
ug
-14
19-S
ep
-14
17-O
ct-
14
14-N
ov-1
4
12-D
ec-1
4
9-J
an-1
5
6-F
eb
-15
6-M
ar-
15
3-A
pr-
15
1-M
ay-1
5
29-M
ay-1
5
26-J
un-1
5
Credit Deposit Ratio (%)
29.7
28
29
30
31
27-J
un-1
4
25-J
ul-14
22-A
ug
-14
19-S
ep
-14
17-O
ct-
14
14-N
ov-1
4
12-D
ec-1
4
9-J
an-1
5
6-F
eb
-15
6-M
ar-
15
3-A
pr-
15
1-M
ay-1
5
29-M
ay-1
5
26-J
un-1
5
Investment Deposit Ratio (%)
354.5
300
310
320
330
340
350
360
20-J
un-1
4
1-A
ug
-14
12-S
ep
-14
24-O
ct-
14
5-D
ec-1
4
16-J
an-1
5
27-F
eb
-15
10-A
pr-
15
22-M
ay-1
5
3-J
ul-15
US
$, b
n
Foreign Exchange Reserves ($, bn)
-0.5
7.8
5.9
1.8
2.6
5.5
-0.5
1.4
2.7 3.1
6.7
12.1
7.9
7.7
5.4
2.6
Feb
-14
Mar-
14
Ap
r-14
May-1
4
Jun-1
4
Jul-14
Aug
-14
Sep
-14
Oct-
14
No
v-1
4
Dec-1
4
Jan-1
5
Feb
-15
Mar-
15
Ap
r-15
May-1
5
US
$, b
n
RBI Intervention: Net US$ Purchase
8.2
8.0
8.5
7.2
8.0
7.4
9.1
10.2
9.6
10.7
10.8
10.9
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
Import cover (no. of month)
Page 16
Spark Chitra Katha
Credit growth in commercial real estate has slowed to near 3 year
low of 7.5% in May’15
Source: MOSPI, Spark Capital Research
Monetary Conditions
Industrial credit growth falls to over a decade low in May’15, much lower
than the 14.2% growth in the previous down cycle
Source: Ministry of Statistics and Programme Implementation (MOSPI)
Sector-wise credit growth: Petroleum, mining, chemicals, textiles
and cement sectors have seen sharp fall in credit growth
Source: SEBI, Spark Capital Research
Services sector credit growth has inched up to 9.1% in May’15, after
hitting a low of 5.3% in Oct’15
Source: CGA, Spark Capital Research
Industrial credit growth slows to a decadal low, services sector credit growth has improved in the last two months
7.5
0
5
10
15
20
25
Sep
-11
Nov-1
1
Jan
-12
Mar-
12
May-1
2
Jul-12
Sep
-12
Nov-1
2
Jan
-13
Mar-
13
May-1
3
Jul-13
Sep
-13
Nov-1
3
Jan
-14
Mar-
14
May-1
4
Jul-14
Sep
-14
Nov-1
4
Jan
-15
Mar-
15
May-1
5
Credit growth in commercial real estate (%, yoy)
37.0
14.2
5.2 0
5
10
15
20
25
30
35
40
May-0
4
Nov-0
4
May-0
5
Nov-0
5
May-0
6
Nov-0
6
May-0
7
Nov-0
7
May-0
8
Nov-0
8
May-0
9
Nov-0
9
May-1
0
Nov-1
0
May-1
1
Nov-1
1
May-1
2
Nov-1
2
May-1
3
Nov-1
3
May-1
4
Nov-1
4
May-1
5
Industrial credit growth (%, yoy) (Share in total credit: 45%)
9.4
10.0
6.3
8.8
21.2
14.7
13.7
16.1
10.7
12.8
15.7
28.2
10.3
14.9
13.4
11.2
22.7
-10.2
-5.3
-0.3
0.9
1.4
1.9
2.9
3.3
3.8
4.3
5.4
5.7
6.5
7.0
8.3
8.6
11.1
Apr-14 May-15
5.3
9.1
0
5
10
15
20
25
Jul-12
Sep-1
2
Nov-1
2
Jan-1
3
Mar-
13
May-1
3
Jul-13
Sep-1
3
Nov-1
3
Jan-1
4
Mar-
14
May-1
4
Jul-14
Sep-1
4
Nov-1
4
Jan-1
5
Mar-
15
May-1
5
Services credit growth (%, yoy) (Share in total credit: 24%)
Page 17
Spark Chitra Katha
Bank credit: Industry loan growth slips to 5.2% while services loan growth hits a six month high in May…
Monetary Conditions
Share (%) (Rs. Bn)
May-15 May-15 May-15 Apr-15 Mar-15 Feb-15 Jan-15 Dec-14 May-14
I Gross Bank Credit (II + III) 100.0 61,516 8.5 8.7 8.6 9.3 9.6 9.6 12.7
II Food Credit 1.7 1,027 -11.9 -2.2 8.9 5.1 3.7 -0.5 0.7
III Non-food Credit (1 to 4) 98.3 60,489 9.0 8.9 8.6 9.4 9.7 9.8 13.0
1 Agriculture & Allied Activities 12.6 7,779 11.0 14.1 15.0 16.5 16.6 18.3 16.8
2 Industry (Micro & Small, Medium and Large ) 42.9 26,389 5.2 6.4 5.6 6.0 6.6 6.8 11.3
3 Services 23.4 14,372 9.1 7.5 5.7 7.0 7.5 6.9 13.1
3.1 Transport Operators 1.5 921 3.8 2.1 -0.8 -0.7 0.2 2.6 6.9
3.2 Computer Software 0.3 178 -0.5 4.1 -7.4 -7.1 -4.9 -3.4 -6.6
3.3 Tourism, Hotels and Restaurants 0.6 369 -7.0 -3.7 -7.1 -8.0 -8.7 -7.0 7.7
3.4 Shipping 0.2 105 6.2 5.8 -1.2 3.8 1.0 4.9 9.3
3.5 Professional Services 1.4 844 5.2 17.6 6.0 5.1 5.5 5.3 12.6
3.6 Trade 6.0 3,702 14.9 13.7 12.2 10.6 11.0 8.9 12.6
3.6.1 Wholesale Trade (other than food procurement) 2.9 1,806 11.3 6.5 7.5 7.0 7.0 4.6 8.3
3.6.2 Retail Trade 3.1 1,896 18.4 21.4 17.3 14.6 15.4 13.5 17.3
3.7 Commercial Real Estate 2.7 1,659 7.5 8.8 8.6 14.3 13.6 15.1 17.8
3.8 Non-Banking Financial Companies (NBFCs) 5.2 3,206 5.6 3.3 6.1 7.1 5.3 3.3 20.2
3.9 Other Services 5.5 3,389 12.8 5.4 1.5 5.2 8.5 8.5 9.0
4 Personal Loans 19.4 11,949 16.6 13.3 15.5 16.0 15.8 15.1 14.8
4.1 Consumer Durables 0.3 157 13.1 13.8 19.3 21.2 35.4 43.6 56.4
4.2 Housing (Including Priority Sector Housing) 10.5 6,484 17.1 17.4 16.7 17.4 16.7 16.0 17.0
4.3 Advances against Fixed Deposits 1.0 603 10.5 6.7 -1.7 7.0 7.8 2.4 -8.8
4.4 Advances to Individuals against share, bonds, etc. 0.1 51 59.2 58.6 42.2 26.5 26.7 23.0 8.2
4.5 Credit Card Outstanding 0.5 324 23.0 22.9 22.5 22.7 22.8 24.1 14.2
4.6 Education 1.0 635 5.7 6.2 5.5 5.5 6.1 6.3 8.7
4.7 Vehicle Loans 2.1 1,297 16.8 -5.3 17.2 16.1 16.4 15.5 21.8
4.8 Other Personal Loans 3.9 2,398 18.9 16.4 18.3 16.7 16.1 16.2 13.2
Growth (yoy, %)
Source: RBI, Spark Capital Research
Page 18
Spark Chitra Katha
Bank credit: Loan growth in energy, mining, chemical and textile sectors has taken the biggest hit…
Monetary Conditions
Source: RBI, Spark Capital Research
Share (%) (Rs. Bn)
May-15 May-15 May-15 Apr-15 Mar-15 Feb-15 Jan-15 Dec-14 May-14
2.1 Mining & Quarrying (incl. Coal) 1.4 357 -5.3 0.8 0.3 0.7 0.9 3.5 17.5
2.2 Food Processing 6.3 1,662 11.1 13.4 17.3 13.5 12.8 12.1 21.8
2.2.1 Sugar 1.5 407 11.3 16.8 20.2 11.6 11.1 13.1 6.5
2.2.2 Edible Oils & Vanaspati 0.8 204 -3.0 -3.8 -1.1 -5.5 -0.7 -6.7 17.5
2.2.3 Tea 0.1 32 8.4 7.3 -1.4 1.9 5.6 -1.0 12.0
2.2.4 Others 3.9 1,020 14.4 16.5 21.3 19.2 16.9 17.3 31.0
2.3 Beverage & Tobacco 0.7 184 2.9 5.5 2.0 9.5 13.7 14.4 18.1
2.4 Textiles 7.6 2,010 0.9 1.5 -0.1 0.6 1.5 3.1 8.6
2.4.1 Cotton Textiles 3.7 990 -0.2 0.1 -0.7 0.7 1.4 2.7 8.4
2.4.2 Jute Textiles 0.1 22 4.6 8.8 11.9 13.2 14.1 20.7 -9.3
2.4.3 Man-Made Textiles 0.8 211 3.6 -0.4 -5.6 -3.6 -4.5 -4.7 7.6
2.4.4 Other Textiles 3.0 787 1.5 3.7 1.7 1.5 3.1 5.3 9.7
2.5 Leather & Leather Products 0.4 103 5.4 3.6 0.4 1.3 4.4 4.8 10.3
2.6 Wood & Wood Products 0.4 98 3.3 7.8 4.3 4.8 3.9 6.3 18.6
2.7 Paper & Paper Products 1.3 340 4.3 4.2 3.8 5.2 6.2 8.6 11.0
2.8 Petroleum, Coal Products & Nuclear Fuels 2.0 523 -10.2 -4.4 -13.4 -6.6 -4.5 -7.4 9.0
2.9 Chemicals & Chemical Products 5.8 1,520 -0.3 -6.5 -7.1 -3.3 -1.0 -8.9 6.1
2.9.1 Fertiliser 0.9 235 -15.2 -15.9 -17.0 -8.8 -5.6 -11.7 0.8
2.9.2 Drugs & Pharmaceuticals 1.9 508 7.6 6.5 1.3 -1.0 -0.1 -4.9 -4.8
2.9.3 Petro Chemicals 1.2 327 -1.7 -25.3 -21.6 -3.9 0.3 -11.1 20.0
2.9.4 Others 1.7 450 1.5 3.8 4.1 -1.9 -0.3 -9.6 14.1
Growth (yoy, %)
Page 19
Spark Chitra Katha
…loan growth has also taken a hit in cement, engineering, metal and road sectors
Monetary Conditions
Source: RBI, Spark Capital Research
Share (%) (Rs. Bn)
May-15 May-15 May-15 Apr-15 Mar-15 Feb-15 Jan-15 Dec-14 May-14
2.10 Rubber, Plastic & their Products 1.4 365 1.9 3.9 1.9 1.7 2.1 5.7 12.8
2.11 Glass & Glassware 0.3 88 -0.5 -3.0 1.6 2.6 1.5 2.1 13.9
2.12 Cement & Cement Products 2.1 563 1.4 3.9 3.9 5.8 7.4 5.6 21.6
2.13 Basic Metal & Metal Product 14.5 3,836 8.3 7.8 6.8 6.8 7.1 7.3 11.9
2.13.1 Iron & Steel 10.8 2,840 7.4 7.6 6.0 5.1 5.0 5.7 10.1
2.13.2 Other Metal & Metal Product 3.8 996 11.0 8.6 9.2 11.8 13.1 12.1 17.4
2.14 All Engineering 5.8 1,524 3.8 7.6 5.2 7.2 5.7 6.5 11.0
2.14.1 Electronics 1.4 380 13.7 4.6 6.1 12.1 8.6 13.0 15.3
2.14.2 Others 4.3 1,144 0.9 8.6 5.0 5.6 4.8 4.4 9.8
2.15 Vehicles, Vehicle Parts & Transport Equipment 2.6 698 7.0 5.0 2.5 0.4 2.1 5.0 10.8
2.16 Gems & Jewellery 2.7 706 6.5 5.7 2.8 4.9 0.6 14.0 -0.4
2.17 Construction 2.8 734 5.7 10.8 18.7 21.4 19.7 24.1 22.9
2.18 Infrastructure 35.2 9,278 8.6 10.6 10.5 10.0 10.4 11.5 10.8
2.18.1 Power 21.5 5,674 13.6 15.4 14.5 13.9 14.7 14.9 13.5
2.18.2 Telecommunications 3.4 885 -2.5 8.7 4.2 -1.4 -1.2 1.8 -3.2
2.18.3 Roads 6.4 1,680 4.6 5.0 6.9 7.5 7.9 10.0 15.4
2.18.4 Other Infrastructure 3.9 1,038 0.8 -2.0 2.9 5.2 4.0 6.1 5.2
2.19 Other Industries 6.8 1,799 -3.2 0.2 -2.2 -3.6 0.5 -3.1 9.0
2 Total Industries 100.0 26,389 5.2 6.4 5.6 6.0 6.6 6.8 11.3
Growth (yoy, %)
Page 20
Spark Chitra Katha
Currency in circulation crosses Rs15tn
Source: RBI, Spark Capital Research
Reserve money growth moderates
Source: RBI, Spark Capital Research
M1 money supply growth at 9.5%
Source: RBI, Spark Capital Research
M2 money supply growth at 9.5%
Source: RBI, Spark Capital Research
M3 Money supply growth at 11%
Source: RBI, Spark Capital Research
Money multiplier
Source: RBI, Spark Capital Research
Currency in circulation crosses Rs.15tn mark; M3 money supply growth remains low at 11%
Monetary Conditions
13.814.2
15.0
9
10
11
12
13
14
15
16
Se
p-1
3
De
c-1
3
Ma
r-1
4
Ju
n-1
4
Se
p-1
4
De
c-1
4
Ma
r-1
5
Ju
n-1
5Currency in Circulation (Rs tn)
9.7
11.2
10.3
7
8
9
10
11
12
13
Ju
n-1
4
Ju
l-1
4
Au
g-1
4
Se
p-1
4
Oct-
14
No
v-1
4
De
c-1
4
Ja
n-1
5
Fe
b-1
5
Ma
r-1
5
Ap
r-1
5
Ma
y-1
5
Ju
n-1
5
%, yo
y
Reserve Money (M0)
8.9
10.0
9.5
7
9
11
13
Jun-1
4
Jul-14
Aug
-14
Sep
-14
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
%, yo
y
M1 Money Supply
11.8
11.2
11.0
10
12
14Jun-1
4
Jul-14
Aug
-14
Sep
-14
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
%, yo
y
M3 Money Supply
5.695.66
5.73
5.6
5.7
5.8
5.9
Jun-1
4
Jul-14
Aug
-14
Sep
-14
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
Money Multiplier
9.1
10.0
9.5
8
9
10
11
12
13
Jun-1
4
Jul-14
Aug
-14
Sep
-14
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
%, yo
y
M2 Money Supply
Page 21
Spark Chitra Katha
Exports fall to $22.3bn in May’15
Source: Ministry of Commerce and Industry
Non oil imports also come down
Source: Ministry of Commerce and Industry
Trade deficit narrows to a 3-month low
Source: Ministry of Commerce and Industry
Sharp decline in both exports and Imports
Source: Ministry of Commerce and Industry
Oil imports contract 41% yoy in May’15
Source: Ministry of Commerce and Industry
Gold imports down to $2.4bn in May’15
Source: Ministry of Commerce and Industry
Trade deficit narrows to a 3-month low of $10.4bn as oil imports remain low
External Sector
28
.0
25
.8
25
.8
26
.8 28
.7
26
.1
26
.5
26
.1
24
.4
21
.9
23
.9
22
.0
22
.3
39
.2
38
.3 40
.1
37
.5
43
.3
39
.5 42
.7
35
.3
32
.1
28
.3
35
.7
32
.9
32
.8
Ma
y-1
4
Ju
n-1
4
Ju
l-1
4
Au
g-1
4
Se
p-1
4
Oct-
14
No
v-1
4
De
c-1
4
Ja
n-1
5
Fe
b-1
5
Ma
r-1
5
Ap
r-1
5
Ma
y-1
5
$, b
n
Exports ($, bn) Imports ($, bn)
14
.5
13
.2
14
.6
12
.8 14
.6
12
.5
11
.7
10
.0
8.2
6.1 7.4
7.4 8.5
24
.8
25
.1
25
.5
24
.7 28
.8
27
.0
25
.3
23
.9
22
.2
28
.3
25
.5
24
.2
Ma
y-1
4
Ju
n-1
4
Ju
l-1
4
Au
g-1
4
Se
p-1
4
Oct-
14
No
v-1
4
De
c-1
4
Ja
n-1
5
Fe
b-1
5
Ma
r-1
5
Ap
r-1
5
Ma
y-1
5
$, b
n
Oil Imports ($, bn) Non Oil Imports ($, bn)
-11
.2
-12
.5
-14
.3
-10
.7
-14
.6
-13
.4
-16
.2
-9.1 -7
.7 -6.4
-11
.8
-11
.0
-10
.4
-18
-15
-12
-9
-6
-3
0
Ma
y-1
4
Ju
n-1
4
Ju
l-1
4
Au
g-1
4
Se
p-1
4
Oct-
14
No
v-1
4
De
c-1
4
Ja
n-1
5
Fe
b-1
5
Ma
r-1
5
Ap
r-1
5
Ma
y-1
5
$, b
n
Trade Balance ($, bn)
12
.3
-14
.8
-20
.2
-10.8-7.9
-16.5
-25-20-15-10-505
1015202530
Ma
y-1
4
Ju
n-1
4
Ju
l-1
4
Au
g-1
4
Se
p-1
4
Oct-
14
No
v-1
4
De
c-1
4
Ja
n-1
5
Fe
b-1
5
Ma
r-1
5
Ap
r-1
5
Ma
y-1
5
Exports (%, yoy) Imports (%, yoy)
2.5
-42.6-41.0
-17.1
11.8
-2.2
-60-50-40-30-20-10
01020304050
Ma
y-1
4
Ju
n-1
4
Ju
l-1
4
Au
g-1
4
Se
p-1
4
Oct-
14
No
v-1
4
De
c-1
4
Ja
n-1
5
Fe
b-1
5
Ma
r-1
5
Ap
r-1
5
Ma
y-1
5
Oil Imports (%, yoy) Non Oil Imports (%, yoy)
2.2
3.1
1.8 2.0
3.8 4
.2
5.6
1.3 1.6 2
.0
5.0
3.1
2.4
May-1
4
Jun-1
4
Jul-14
Aug
-14
Sep
-14
Oct-
14
No
v-1
4
Dec-1
4
Jan-1
5
Feb
-15
Mar-
15
Ap
r-15
May-1
5
$, b
n
Gold Imports ($, bn)
Page 22
Spark Chitra Katha
BoP: CAD under control, Short term debt declines and asset to liability ratio improves
Remittances and software exports remain stable
Source: RBI, Spark Capital Research
Short term debt declines
Source: RBI, Spark Capital Research
External Sector
($bn) Mar-14 Jun-14 Sep-14 Dec-14 Mar-15
CAD (I+II) = A -1.3 -7.9 -10.1 -8.4 -1.5
Merchandise balance (I) -30.7 -34.6 -38.6 -39.3 -31.7
Invisibles (i+ii+iii) = (II) 29.3 26.7 28.5 30.9 30.2
Software Exports (i) 17.7 17.0 16.9 17.8 18.6
Remittances (ii) 16.2 16.6 16.5 16.5 16.6
Others (iii) -4.6 -6.9 -5.0 -3.5 -5.0
Capital Account (a+b+c+d+e) = B 9.2 19.2 16.5 23.6 30.7
FDI inflows (a) 0.9 7.9 7.9 7.2 9.6
Portfolio flows (b) 9.3 12.4 9.8 6.3 12.5
ECBs (c) 5.1 1.3 -0.1 -0.2 1.8
NRI Deposits (d) 3.7 2.4 4.1 3.6 4.0
Others (e) -9.8 -4.9 -5.1 6.7 2.9
Errors and Omissions (C.) -0.7 -0.1 0.5 -1.9 1.0
Overall BoP (A+B+C) 7.1 11.2 6.9 13.2 30.1
CAD (% of GDP) -0.3 -1.6 -2.0 -1.6 -0.3
BoP: Sharp fall in merchandise trade deficit, CAD narrows to a multi-year low
($bn) Mar-14 Jun-14 Sep-14 Dec-14 Mar-15
Assets (A) 483.7 491.8 488.5 490.5 517.8
Liabilities (i+ii+iii+iv) = B 820.4 841.8 845.4 844.2 880.8
Direct Investment (i) 242.7 250.4 252.2 252.1 264.7
Equity Securities (ii) 139.7 147.1 144.8 141.2 148.4
Debt Securities (iii) 57.8 61.7 67.5 70.1 79.6
Other Investment (iv) 380.3 382.5 380.9 380.8 388.0
Currency & Deposits 104.0 106.4 108.9 110.2 115.3
Loans 179.3 178.5 176.8 176.6 178.4
Trade Credits 83.9 84.2 82.5 81.0 82.9
Other Liabilities 13.0 13.4 12.8 13.0 11.4
IIP: Net (A-B) -336.8 -349.9 -356.9 -353.7 -363.0
Assets to Liability Ratio (%) 59.0 58.4 57.8 58.1 58.8
India's International Investment Position (IIP)
92
.7
84
.7
17.8
15
16
17
18
19
20
21
22
23
24
25
60
70
80
90
100
De
c-1
1
Ma
r-1
2
Jun
-12
Se
p-1
2
De
c-1
2
Ma
r-1
3
Jun
-13
Se
p-1
3
De
c-1
3
Ma
r-1
4
Jun
-14
Se
p-1
4
De
c-1
4
Ma
r-1
5
Short-term debt ($bn) Short-term (% of external debt) - RHS
3.5
3.5
3.3
3.4
3.6
3.1 3.2 3.2
3.3
3.3
LQ LQ-1 LQ-2 LQ-3 LQ-4
% o
f G
DP
Software Exports Remittances
Page 23
Spark Chitra Katha
Exchange rate: Rupee largely stable despite Greece turmoil
External Sector
Rupee vs. US dollar
Source: RBI, Spark Capital Research
Rupee vs. Eurp
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
52.70
62.4863.75
50
52
54
56
58
60
62
64
66
68
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
5INR/USD
85.71
102.95 100.12
70
75
80
85
90
95
100
105
110
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
INR/GBP
68.15
84.60
71.20
60
65
70
75
80
85
90
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
INR/Euro
68.00
60.96
52.07
40
45
50
55
60
65
70
Se
p-1
2
De
c-1
2
Ma
r-1
3
Ju
n-1
3
Se
p-1
3
De
c-1
3
Ma
r-1
4
Ju
n-1
4
Se
p-1
4
De
c-1
4
Ma
r-1
5
Ju
n-1
5
INR/100Yen
8.65
10.26
10.29
7
8
9
10
11
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
INR/Yuan
105.6
102.7
110.0
90
95
100
105
110
115
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
REER: 36 Currencies
Page 24
Spark Chitra Katha
Indirect tax collections on the rise…
Source: CGA, Spark Capital Research
Fiscal deficit at 37.5% of BE in Apr-May’15 vs. 47% in Apr-May’14
Source: CGA, Spark Capital Research
Sharp uptick in indirect tax collections while direct tax collections are weak
Fiscal
Govt is frontloading expenditure…
Source: CGA
…focus is on plan spending
Source: CGA, Spark Capital Research
3.2
4.5
16.7
47.0
56.6
2.2
14.6
14.8
37.5
43.8
0
10
20
30
40
50
60
Net tax revenue Non-tax revenue Expenditure Fiscal deficit Revenue deficit
(% o
f fu
ll year
targ
et)
Apr-May FY15 Apr-May FY16
12.4
13.2
11.5 12.1
10.1
11.0
12.1 11.8
15.8
12.7 12.4
12.0 12.3 12.7
13.5 13.9
16.7
14.8
FY
98
FY
99
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
14
FY
15
FY
16
Total expenditure in Apr-May 15 (% of full fiscal)
Avg: 11.8%
In last 3 yrs while govt
started frontloading
spending, it had to cut it
sharply in the 2nd half,
which is unlikely in FY16
32.6
-7.8 -9.5 -18.2
14.0
-10.8
20.6
145.1
20.6
-20
0
20
40
60
80
100
120
140
160
Income tax Corporate tax Custom duties Excise duties Service tax
(Gro
wth
, %
, yoy)
Apr-May FY15 Apr-May FY16
17.3
28.3
43.2 38.3
47.0
32.9 37.6
6.9
95.2
FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16
Ministry of Road Transport and Highways (Rs. bn)
Plan expenditure on Road & Highways in Apr-May'15 is more than double the
average exp in first two months of the fiscal
Page 25
Spark Chitra Katha
European markets have performed well on YTD basis…
Source: Bloomberg, Spark Capital Research.
Muted YTD performance by India but rally in last 1 month….
Source: Bloomberg, Spark Capital Research.
China leads the pack even after more than 25%+ fall in last month, India showed muted performance
Market data
52
2117
6 66
2 2
-1-2 -2 -3 -6
-32-24
-1-8
1
0
6 6
-1
4
-1 -3 -1
-40
-30
-20
-10
0
10
20
30
40
50
60
Shenzen Shangai Russia Hang Seng South Africa Brazil Nifty Sensex Thailand Turkey Malaysia Taiwan Indonesia
Change YTD % Change 1M %
21
17 17 17
14
7 7
32 2
1
-1
02
0
2 20 0 1
-1
0 0
-1-5
0
5
10
15
20
25
Spain France Japan Germany Euro Stoxx Korea NASDAQ Australia UK S&P 500 Dow Jones US Canada
Change YTD % Change 1M %
Page 26
Spark Chitra Katha
INR has been range bound in 1H15…..
Source: Bloomberg, Spark Capital Research.
Precious metals performance- Last 1 month and Year to date
Source: Bloomberg, Spark Capital Research.
-3 -4-4
-5
-15
-18
-3-2
-4 -4 -5
-10
-20
-18
-16
-14
-12
-10
-8
-6
-4
-2
0
Gold (INR/10g)
Gold ($/OZ) Silver (INR/kg) Silver ($/OZ) Platinum ($/Oz)
Palladium ($/Oz)
Change YTD % Change 1M %
Base metals melted big time this year…..
Source: Bloomberg, Spark Capital Research.
10 10
3
0
0 0
-3-3 -3
-5-7
-7 -8
-11
-16
42
-3
0 01
-1
0
-1-2
00
-1
4
0
-20
-15
-10
-5
0
5
10
AU $ Euro Ruble Yuan GBP INR Sing $ JPY Thai Bhat Korean Won S. Af Rand Indo Rup Malay Ringgit
Turkish Lira Brazil Real
Change YTD % Change 1M %
1
0-2
-6-8 -8 -8
-10-12
-22
-10
-1 -1-3
-8
-2-2
-15
-5
-17
-25
-20
-15
-10
-5
0
5
10
Bre
nt
Lead
AU
Co
al
Zin
c
S.A
f Co
al
Ind
o C
oal
Alu
min
ium
WT
I
Co
pper
Ch
ina Ir
on o
re
Change YTD % Change 1M %
RBI’s currency management efforts has provided stability to INR…..
Market data
Page 27
Spark Chitra Katha
Cap goods and Healthcare leading the rally on YTD basis
Market data
Cap goods and Healthcare have outperformed the broader indices…
Source: Bloomberg, Spark Capital Research.
Metals and Reality current levels are close to lowest levels….
Note: 52 week low price is based as 100.Source: Bloomberg, Spark Capital Research.
19.3 18.6
3.5 3.42.1 1.6 1.5 1.4 0.7 0.4
-0.4 -0.6-1.8
-9.3
-16.5
11.012.6
6.3 6.5 5.9 5.7
0.6
6.6 6.17.3
4.4 4.7
-0.5
4.1
-2.3
-20
-15
-10
-5
0
5
10
15
20
Cap gds H. care BSE 200 BSE 500 Nifty Sensex BSE Tech FMCG Oil & Gas Banks Power Auto Tech Realty Metals
Change YTD% Change 1M%
155 153
145
136 135
130126 125 124 123 122 121
119115 114
100
110
120
130
140
150
160
Metals Realty Banks Cap gds Auto Oil & Gas BSE Tech BSE 200 BSE 500 Nifty Power Sensex H. care FMCG Tech
52W high Current price
Page 28
Spark Chitra Katha
Stocks near 52 week high (BSE 200 subset)
Source: Bloomberg, Spark Capital Research
Stock & Index 52 week H/L: Key trends
Market data
Stocks near 52 week high (BSE 200 subset)
Source: Bloomberg, Spark Capital Research
Nifty stocks performance snapshot
Source: Bloomberg, Spark Capital Research
0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5%
Jubiliant FoodFederal Bk
Bharti AirtelIOCLBPCL
GlenmarkBajaj Fin
EmamiBajaj Finserv
Kotak HPCLEicher
BritanniaIB Hous. Fin
Coal IndiaMotherson Sumi
MarutiDabur
CumminsAB Nuvo
Aurobindo Ph.
Near 52 Week highs
0% 2% 4% 6% 8% 10% 12% 14%
TitanPower Grid
ACCGrasim
GAILNTPC
Tata PowerBank of Baroda
PNBCairnWipro
ITCJSW
Tata SteelONGC
Tata MotorsNMDC
VedantaTech M
HindalcoNear 52 Week lows
Price Performance (%)
Name Sector Current 52W high 52W low 1m 3M YTD
Asian Paints Materials 823 923 566 16.6 (4.6) 9.4
Bosch Auto 23,544 27,990 12,610 16.1 (11.0) 21.0
Ambuja Cements Materials 252 287 202 15.5 (2.0) 10.3
Cipla/India Pharma 666 753 428 14.5 (6.5) 6.3
Ultratech Cement Materials 3,138 3,399 2,297 14.2 4.5 17.3
IndusInd Bank Banks 924 967 527 14.0 (2.7) 15.2
Hindustan Unilever FMCG 927 981 616 13.8 (2.3) 22.0
Dr Reddy's Labs Pharma 3,773 3,828 2,606 13.7 (0.6) 16.2
Sun Pharma Pharma 919 1,201 724 13.0 (20.1) 11.2
Zee Entertainment Media 375 402 265 12.2 8.0 (1.6)
Reliance Industries Oil & Gas 998 1,050 796 12.1 8.2 12.0
L&T Cap gds 1,858 1,894 1,400 12.1 3.0 24.3
Lupin Pharma 1,916 2,115 1,040 11.3 (3.3) 34.2
HDFC Banks 1,318 1,402 946 10.8 1.0 16.1
BPCL Oil & Gas 927 953 561 10.7 13.3 43.5
BHEL Cap gds 273 300 194 10.0 12.6 3.0
PNB Banks 145 232 130 9.7 (12.6) (34.0)
Coal India Energy 434 435 331 9.6 10.7 13.1
Bajaj Auto Auto 2,499 2,695 1,913 9.3 19.3 2.7
Kotak Mahindra Bank Banks 711 738 426 8.4 (1.7) 12.5
Maruti Suzuki Auto 4,051 4,090 2,479 8.4 10.5 21.6
HDFC Bank Banks 1,092 1,109 791 8.2 5.1 14.7
Grasim Industries Materials 3,625 4,025 3,173 8.0 (4.1) 7.1
HCL Tech IT 955 1,058 708 6.5 (2.2) 19.6
M&M Auto 1,270 1,434 1,102 6.5 1.8 2.9
Bank of Baroda Banks 156 229 137 6.0 (11.3) (28.1)
ICICI Bank Banks 313 393 267 5.9 (1.1) (11.2)
Axis Bank Banks 584 655 361 5.9 3.2 16.2
SBI Banks 268 336 235 5.6 (6.3) (14.0)
ACC Materials 1,478 1,775 1,336 5.4 (7.4) 5.6
Hero MotoCorp Auto 2,639 3,272 2,251 5.4 2.2 (15.1)
Wipro IT 565 678 513 5.2 (9.4) 1.8
ITC FMCG 312 410 294 5.0 (11.2) (15.3)
Idea Cellular Telecom 176 204 133 3.1 (13.1) 14.2
Bharti Airtel Telecom 422 443 327 1.8 (0.8) 19.7
Yes Bank Banks 812 910 502 0.8 (3.5) 5.2
Tata Power Power 73 110 68 0.4 (9.0) (11.2)
NMDC Materials 115 188 112 (0.2) (14.9) (20.8)
TCS IT 2,500 2,840 2,339 (0.3) (5.9) (2.3)
Infosys IT 971 1,168 796 (1.6) (13.2) (1.5)
NTPC Power 133 165 127 (2.5) (15.4) (7.6)
ONGC Energy 290 459 288 (3.6) (7.1) (15.1)
Power Grid Power 140 159 127 (3.6) (9.2) 1.6
Tata Steel Materials 281 574 279 (5.5) (18.6) (29.6)
Cairn India Energy 170 350 164 (5.8) (25.2) (29.2)
GAIL India Power 373 552 353 (5.8) (5.6) (16.1)
Tata Motors Auto 386 606 381 (8.5) (30.6) (21.3)
Hindalco Industries Materials 105 199 99 (10.4) (23.1) (33.6)
Tech Mahindra IT 477 750 459 (13.5) (28.2) (26.4)
Vedanta Materials 145 306 138 (21.0) (27.6) (32.3)
Page 29
Spark Chitra Katha Market data
FII’s and DII’s equity flow has been very strong this year….
Source: Bloomberg, Spark Capital Research.
Cash market turnover and Delivery volumes
Source: Bloomberg, Spark Capital Research
FII’s and DII’s have pumped US$6bn and US$4bn respectively on YTD basis
4 4
2
1
4
(2)
(1)(1)
2
3
1
3
(0)
0
4
1
3
2 2
1 1
0
2
(0)
3
1 2 1
(0)
(1)
1
(3)
(2) (1)
(1)
(2)
1
(0)
1
(1)(2)
(1) (1)
(0)
0
(2)
(1)(1) (1) (1)
0
(0)
1
(1)
1
(1)
0 0
2 1
2
(0)
-4
-3
-2
-1
0
1
2
3
4
5
Jan
-13
Feb
-13
Mar-
13
Ap
r-13
May-1
3
Jun
-13
Jul-
13
Aug
-13
Sep
-13
Oct-
13
No
v-1
3
Dec-1
3
Jan
-14
Feb
-14
Mar-
14
Ap
r-14
May-1
4
Jun
-14
Jul-
14
Aug
-14
Sep
-14
Oct-
14
No
v-1
4
Dec-1
4
Jan
-15
Feb
-15
Mar-
15
Ap
r-15
May-1
5
Jun
-15
Jul-
15
FII (US$ bn) DII (US$bBn)
3.5 2.7 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
40%
42%
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%
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
Jan
-13
Feb-1
3
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
Cash market Turnover (Rs. tn) Delivered volume % (RHS)
Page 30
Spark Chitra Katha
FII’s pumped in almost equally in Debt and Equity this year
Source: Bloomberg
Market data
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
2015 6,000 184 610 na 6794 2015 6,903 -461 99 na 6541
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
FIIs have pumped in YTD $12bn equally between Debt & Equity, with some selling in Debt in last quarter
4.1 4.1 1.9
1.0
3.8
(1.8) (1.0) (0.9) 2.0 2.9 1.1
2.5 (0.0) 0.4
3.7 1.2 2.8 1.8 1.9
1.1 0.9 0.1
2.3
(0.1)
2.9 1.4 1.7 1.2 (0.1)
(1.0)
0.5
0.6 0.8
0.9 0.8
0.5
(5.4)
(2.1) (1.4) (1.3)(2.1)
(0.8)
0.9
2.0
2.6
1.6
(1.8)
3.4
2.7 3.8
2.8 2.7 2.8
1.9
1.8
3.7
2.2 1.0
0.5
(1.3)
0.3 0.1
-8
-6
-4
-2
0
2
4
6
8
Jan
-13
Feb-1
3
Mar-
13
Ap
r-13
May-1
3
Jun
-13
Jul-
13
Aug
-13
Sep
-13
Oct-
13
No
v-1
3
Dec-1
3
Jan
-14
Feb-1
4
Mar-
14
Ap
r-14
May-1
4
Jun
-14
Jul-
14
Aug
-14
Sep
-14
Oct-
14
No
v-1
4
Dec-1
4
Jan
-15
Feb-1
5
Mar-
15
Ap
r-15
May-1
5
Jun
-15
Jul-
15
FII Investments in Debt ($bn) FII Investments in Equity ($bn)
Page 31
Spark Chitra Katha
DII Investments in Equity – Consistently net buyers in last 3 months
Source: Bloomberg
Market data
DII’s have pumped US$ 5bn in last 3 months-First time in in last 3 years
(1.3)
(2.4)
(0.7)
0.1 0.1 0.2
(1.0)(0.8)
(1.7)
(0.9)(1.0)
(1.6)
(3.2)
(1.6)(1.4)
(0.5)
(2.2)
1.4
(0.3)
1.1
(1.5)
(2.0)
(1.5) (1.2)
(0.2)
0.0
(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
1.8 1.3
1.9
(0.1)
-4
-3
-2
-1
0
1
2
3
Jan
-12
Feb-1
2
Mar-
12
Ap
r-12
May-1
2
Jun
-12
Jul-
12
Aug
-12
Sep
-12
Oct-
12
No
v-1
2
Dec-1
2
Jan
-13
Feb-1
3
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
DII Investment in Equity ($bn)
Domestics mutual funds net debt investment (US$bn)
Source: Bloomberg, Spark Capital Research
Domestics mutual funds net equity investment (US$bn)
Source: Bloomberg, Spark Capital Research
0 0
3
2
4
2
(2)
(4)
(0)
(4) (4)
7
2
-6
-4
-2
0
2
4
6
8
FY
04
FY
05
FY
06
FY
07
FY
08
FY
09
FY
10
FY
11
FY
12
FY
13
FY
14
FY
15
YT
D
5 4 8 12
18 18
38
55
84 86 90
96
6
0
20
40
60
80
100
120
FY
04
FY
05
FY
06
FY
07
FY
08
FY
09
FY
10
FY
11
FY
12
FY
13
FY
14
FY
15
YT
D
Page 32
Spark Chitra Katha
MSCI Indices: India’s Forward PB @ 2.8x
Source: Bloomberg, Spark Capital Research
MSCI Indices: India’s Forward PE @ 16.1x
Source: Bloomberg, Spark Capital Research
MSCI Indices US$ performance – Most of the markets delivered negative performance in last 1 month except India
Source: Bloomberg, Spark Capital Research
MSCI Indices: Emerging markets outperforms developed markets on YTD basis
Market data
22
5 5 3 2 2 2
0
(1)
(12) (13)
(4)
(12)
(1)
(4)
(1)
0
7
(5) (5)
(2)(1)
(20)
(15)
(10)
(5)
0
5
10
15
20
25
Russia China Europe APAC World US India EM Asia APAC ex JP Brazil Indonesia
Change YTD% Change 1M%
17.1 16.3 16.1 15.6
13.9 13.4
12.7 12.4 11.3
10.0
5.7
4
6
8
10
12
14
16
18
US
Wo
rld
Ind
ia
Euro
pe
Ind
on
esi
a
AP
AC
Bra
zil
AP
xJ
EM
Asia
Ch
ina
Russia
2.8 2.7 2.6
2.1
1.8
1.4 1.4 1.4 1.3 1.3
0.5
0.0
0.5
1.0
1.5
2.0
2.5
3.0
Ind
ia
US
Ind
on
esi
a
Wo
rld
Euro
pe
AP
xJ
AP
AC
EM
Asia
Bra
zil
Ch
ina
Russia
Page 33
Spark Chitra Katha India market cap to GDP is still hovering around average whereas Midcaps valuations at its peak
Macro Indicators: Market data
Sensex 12 month forward PE is around average…
Source: Bloomberg
Nifty 12 month forward PE is retraced to Avg after kissing +1sd YTD
Source: Bloomberg
India market cap to GDP below its average since 2006
Source: Bloomberg, Spark Capital Research
BSE Mid caps 12 month forward PE is almost at its peak
Source: Bloomberg, Spark Capital Research
15.0
17.2
12.8
80
120
160
200
240
280
320
8
10
12
14
16
18
20
22
Dec-0
5
Jun
-06
Dec-0
6
Jun
-07
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
Sensex PE Avg +1sd -1sd Price (Index)
12.1
15.0
9.2
5
7
9
11
13
15
17
19
Dec-0
5
Jun
-06
Dec-0
6
Jun
-07
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
BSE Midcaps PE Avg +1sd -1sd
88
147
49
98
59 49
81
72
40
60
80
100
120
140
160
Dec-0
5
Jun
-06
Dec-0
6
Jun
-07
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
India Mkt cap to GDP Avg
14.5
16.4
12.5
80
120
160
200
240
280
320
8
10
12
14
16
18
20
22
Dec-0
5
Jun
-06
Dec-0
6
Jun
-07
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
Nifty PE Avg +1sd -1sd Price (Index)
Page 34
Spark Chitra Katha
Sensex 12 month forward PB still around average
Source: Bloomberg
Nifty 12 month forward PB trading around average levels
Source: Bloomberg
Nifty Expected average return chart based on 12 month forward PE
Source: Bloomberg, Spark Capital Research
Nifty delivered 7% average annual return when trading in current range of valuations in past
Sensex 12 month forward ROE
Source: Bloomberg, Spark Capital Research
Macro Indicators: Market data
2.6
3.2
2.1
1.5
2.0
2.5
3.0
3.5
4.0
4.5
Dec-0
5
Jun
-06
Dec-0
6
Jun
-07
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
Sensex PB Avg +1sd -1sd
2.5
3.1
2.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
Dec-0
5
Jun
-06
Dec-0
6
Jun
-07
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
Nifty PB Avg +1sd -1sd
17.5
19.3
15.7
14
15
16
17
18
19
20
21
22
Dec-0
5
Jun
-06
Dec-0
6
Jun
-07
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
Sensex ROE Avg +1sd -1sd
15.9
9.1 7.4
3.0
(3.5)
33.5
21.0
8.8 6.8
(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
Page 35
Spark Chitra Katha
FMCG and Healthcare trading at their peak valuations
BSE Auto- 12 month forward PE trend
Source: Bloomberg
Macro Indicators: Market data
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
12.6
15.8
9.4
5
7
9
11
13
15
17
19
21
23
Dec-0
5
Aug
-06
Ap
r-07
Dec-0
7
Aug
-08
Ap
r-09
Dec-0
9
Aug
-10
Ap
r-11
Dec-1
1
Aug
-12
Ap
r-13
Dec-1
3
Aug
-14
Ap
r-15
Auto PE(x) Avg
+1sd -1sd
1.8
2.2
1.4
1.0
1.2
1.4
1.6
1.8
2.0
2.2
2.4
2.6
2.8
3.0
Dec-0
5
Aug
-06
Ap
r-07
Dec-0
7
Aug
-08
Ap
r-09
Dec-0
9
Aug
-10
Ap
r-11
Dec-1
1
Aug
-12
Ap
r-13
Dec-1
3
Aug
-14
Ap
r-15
Bankex PB Avg
+1sd -1sd
19.9
25.6
14.2
5
10
15
20
25
30
35
40
Dec-0
5
Aug
-06
Ap
r-07
Dec-0
7
Aug
-08
Ap
r-09
Dec-0
9
Aug
-10
Ap
r-11
Dec-1
1
Aug
-12
Ap
r-13
Dec-1
3
Aug
-14
Ap
r-15
Cap gds PE(x) Avg
+1sd -1sd
22.3
30.3
14.4
5
10
15
20
25
30
35
40
45
Dec-0
5
Aug
-06
Ap
r-07
Dec-0
7
Aug
-08
Ap
r-09
Dec-0
9
Aug
-10
Ap
r-11
Dec-1
1
Aug
-12
Ap
r-13
Dec-1
3
Aug
-14
Ap
r-15
Cons durables PE(x)Avg+1sd-1sd
24.3
28.5
20.2
15
17
19
21
23
25
27
29
31
33
35
Dec-0
5
Aug
-06
Ap
r-07
Dec-0
7
Aug
-08
Ap
r-09
Dec-0
9
Aug
-10
Ap
r-11
Dec-1
1
Aug
-12
Ap
r-13
Dec-1
3
Aug
-14
Ap
r-15
FMCG PE(x) Avg
+1sd -1sd
19.2
22.5
15.9
10
12
14
16
18
20
22
24
26
28
Dec-0
5
Aug
-06
Ap
r-07
Dec-0
7
Aug
-08
Ap
r-09
Dec-0
9
Aug
-10
Ap
r-11
Dec-1
1
Aug
-12
Ap
r-13
Dec-1
3
Aug
-14
Ap
r-15
Healthcare PE(x) Avg
+1sd -1sd
Page 36
Spark Chitra Katha
BSE IT- 12 month forward PE trend
Source: Bloomberg
Metals and PSU indices are in free fall mode
Macro Indicators: Market data
BSE Metal- 12 month forward PE trend
Source: Bloomberg
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
17.8
21.3
14.3
8
10
12
14
16
18
20
22
24
26
Dec-0
5
Aug
-06
Ap
r-07
Dec-0
7
Aug
-08
Ap
r-09
Dec-0
9
Aug
-10
Ap
r-11
Dec-1
1
Aug
-12
Ap
r-13
Dec-1
3
Aug
-14
Ap
r-15
IT Avg +1sd -1sd
9.1
11.5
6.8
4
6
8
10
12
14
16
18
Dec-0
5
Aug
-06
Ap
r-07
Dec-0
7
Aug
-08
Ap
r-09
Dec-0
9
Aug
-10
Ap
r-11
Dec-1
1
Aug
-12
Ap
r-13
Dec-1
3
Aug
-14
Ap
r-15
Metal PE(x) Avg
+1sd -1sd
11.7
14.0
9.4
6
8
10
12
14
16
18
20
Dec-0
5
Aug
-06
Ap
r-07
Dec-0
7
Aug
-08
Ap
r-09
Dec-0
9
Aug
-10
Ap
r-11
Dec-1
1
Aug
-12
Ap
r-13
Dec-1
3
Aug
-14
Ap
r-15
Oil & Gas PE(x) Avg
+1sd -1sd
15.9
20.9
11.0
10
12
14
16
18
20
22
24
26
28
30
Dec-0
7
Aug
-08
Ap
r-09
Dec-0
9
Aug
-10
Ap
r-11
Dec-1
1
Aug
-12
Ap
r-13
Dec-1
3
Aug
-14
Ap
r-15
Power PE(x) Avg+1sd -1sd
13.2
17.7
8.6
4
6
8
10
12
14
16
18
20
22
24
26
Dec-0
7
Aug
-08
Ap
r-09
Dec-0
9
Aug
-10
Ap
r-11
Dec-1
1
Aug
-12
Ap
r-13
Dec-1
3
Aug
-14
Ap
r-15
Realty PE(x) Avg+1sd -1sd
10.1
11.7
8.6
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
PSU PE(x) Avg+1sd -1sd
Page 37
Spark Chitra Katha
Sensex EPS trend (Index to 100)
Source: Bloomberg
Nifty EPS trend (Index to 100)
Source: Bloomberg
3
7
Sensex and Nifty EPS are downgraded on YTD basis after continuous upgrades last year
Macro Indicators: Market data
90
92
94
96
98
100
102
104
106
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
FY15 FY16 FY17
90
92
94
96
98
100
102
104
106
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
FY15 FY16 FY17
Nifty stocks EPS (FY1 & FY2) revision
Source: Bloomberg
C o mpany name Secto r M cap (R s mn) 1M 3 M 6M
BPCL Oil & Gas 6,55,331 3.4 18.0 12.6
L&T Cap gds 16,89,423 1.6 0.9 -1.4
Kotak M ahindra Bank Banks 13,09,198 1.2 13.6 7.0
Infosys IT 22,77,306 0.5 -4.5 -3.6
TCS IT 50,82,703 0.5 -1.2 -5.0
Reliance Industries Oil & Gas 32,69,612 0.4 0.6 -4.6
Yes Bank Banks 3,63,336 0.2 0.4 0.4
Wipro IT 13,60,567 0.1 -2.0 -1.8
GAIL India Power 4,92,106 0.1 -14.5 -9.6
Idea Cellular Telecom 6,55,797 0.1 -2.8 -0.6
BHEL Cap gds 6,40,292 0.1 -2.9 -2.2
Axis Bank Banks 13,89,208 0.1 0.6 0.3
Power Grid Power 7,42,624 0.1 0.5 0.2
Hero M otoCorp Auto 5,11,200 0.0 -8.4 -26.9
NTPC Power 11,46,944 0.0 -2.0 -0.8
HDFC Banks 20,68,138 0.0 -1.5 -1.2
Tata Power Power 2,02,036 0.0 -6.2 -1.1
Zee Entertainment M edia 3,54,310 0.0 -5.5 -1.0
Bajaj Auto Auto 7,47,941 0.0 -4.7 -15.1
Bharti A irtel Telecom 17,40,668 0.0 -4.1 -2.5
Asian Paints M aterials 7,43,378 0.0 -7.4 -1.0
ICICI Bank Banks 18,17,237 -0 .1 -2.2 -0.9
HDFC Bank Banks 26,82,740 -0 .1 -1.4 -1.8
Hindustan Unilever FM CG 20,10,074 -0 .1 -1.1 0.2
Bank of Baroda Banks 3,32,056 -0 .1 -13.9 -7.4
Coal India Energy 26,53,505 -0 .1 -2.6 -1.5
Cairn India Energy 3,44,317 -0 .1 -10.4 -14.0
HCL Tech IT 13,52,551 -0 .1 -3.0 -0.1
SBI Banks 20,35,310 -0 .1 -6.1 -2.2
Ambuja Cements M aterials 3,74,938 -0 .1 -4.6 0.1
ITC FM CG 25,24,087 -0 .1 -4.5 -1.7
Sun Pharma Pharma 21,14,351 -0 .2 -12.6 -4.4
ONGC Energy 26,51,774 -0 .2 -4.3 -7.1
Lupin Pharma 8,56,986 -0 .2 -5.6 -0.5
IndusInd Bank Banks 4,63,706 -0 .2 -0.8 -0.3
Cipla/India Pharma 5,09,320 -0 .2 -6.3 -2.4
Vedanta M aterials 5,09,038 -0 .3 -6.8 -6.7
Dr Reddy's Labs Pharma 6,13,647 -0 .4 -1.5 -5.9
NM DC M aterials 4,67,242 -0 .4 -17.1 -4.9
PNB Banks 2,61,956 -0 .5 -18.9 -10.0
Bosch Auto 7,26,687 -1.2 na na
Tata Steel M aterials 2,93,647 -1.3 -24.7 -22.5
Hindalco Industries M aterials 2,28,181 -1.4 -18.4 -4.2
Tata M otors Auto 13,80,700 -1.4 -11.6 -9.4
Ultratech Cement M aterials 8,43,362 -1.7 -9.5 -16.9
Tech M ahindra IT 4,54,521 -1.8 -14.7 -8.4
Grasim Industries M aterials 3,22,862 -1.9 -4.7 -37.1
ACC M aterials 2,77,863 -3 .3 -6.4 -8.9
M &M Auto 8,18,848 -3 .6 -4.6 -11.2
M aruti Suzuki Auto 12,07,021 -10.0 -1.3 -9.0
A verage EP S revisio n (F Y1, F Y2) %
Page 38
Spark Chitra Katha
Q4 15 witnessed the worst quarter with negative Sales and PAT growth
Fundamentals Data
Nifty constituents - Quarterly sales growth versus EBIT margin-First negative sales growth of -8%..
Source: Bloomberg
Quarterly PAT growth is well below average..
Source: Bloomberg
Lowest PAT as % of GDP in FY15..
Source: Bloomberg
37
32
2219
27 2623
28
18 1815
86
4
1517
1315
4
-1
-8 9
10
11
12
13
14
15
16
17
18
-10
-5
0
5
10
15
20
25
30
35
40
Q4'10 Q1'11 Q2'11 Q3'11 Q4'11 Q1'12 Q2'12 Q3'12 Q4'12 Q1'13 Q2'13 Q3'13 Q4'13 Q1'14 Q2'14 Q3'14 Q4'14 Q1'15 Q2'15 Q3'15 Q4'15
Sales ex fin ex RM Margin ex fin ex RM (RHS)
39
45
23
29 24
1
16 14
(5)
25
4 1
22
9
19 14
22
10
2
(14)-20
-10
0
10
20
30
40
50
Q1'1
1
Q2'1
1
Q3'1
1
Q4'1
1
Q1'1
2
Q2'1
2
Q3'1
2
Q4'1
2
Q1'1
3
Q2'1
3
Q3'1
3
Q4'1
3
Q1'1
4
Q2'1
4
Q3'1
4
Q4'1
4
Q1'1
5
Q2'1
5
Q3'1
5
Q4'1
5
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
Last 5 year average : 15% Average since 2004 : 4.3
Page 39
Spark 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 picking after bottom in FY14
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
9.1
7.0
7.5
8.0
8.5
9.0
9.5
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
15E
10.8
9.5 9.6 9.79.4
11.3
9.910.3
9.9 10.19.8 9.6
10.2
12.8
12.0 12.2
13.8
14.1
16.2 13.7
15.1
14.2
13.4 12.7
12.3 12.2
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
15E
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
3.7
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
15E
6.57.2
9.19.7
13.7
14.9
12.812.1
13.2
10.39.8 9.7
11.1
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
15E
Capex set to pick up with increase in Infra spending by government….
Page 40
Spark Chitra Katha
Gearing is continuously on rise while ROE’s bottoming out
Fundamentals Data
Indian banking sector- NPA and restructured trend
Source: Bloomberg
Gearing at its highest levels since FY06…
Note: Ex-financials universe. Source: Bloomberg
BSE 200 ex financials- Dissecting return on equity into key drivers
Source: Bloomberg, Spark Capital Research
32 33 31 33 34 32 31 31 32 33
20 2334
3827 32 39
44 45 42
0
10
20
30
40
50
60
70
80
90
FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15Est
Net debt to Equity Cash to Equity Total debt to Equity
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 FY15Est
ROE PAT margin Leverage Asset turnover (RHS)
Indian corporate return on equity at its trough levels on the back of falling
margins and declining asset turnover…
Page 41
Spark Chitra Katha
July and August 2015
Macro Release Calendar
Source: Bloomberg, Spark Capital Research
Date Time Event For the period of Survey Actual Prior Revised
Ma
cro
Eve
nts
So
Fa
r
10-Jun-2015 17:30 BoP Current Account Balance 1Q $1.80B -$1.30B -$8.20B -$8.26B
12-Jun-2015 17:30 Industrial Production YoY Apr 1.50% 4.10% 2.10% 2.50%
12-Jun-2015 17:30 CPI YoY May 5.00% 5.01% 4.87% --
15-Jun-2015 12:00 Wholesale Prices YoY May -2.50% -2.36% -2.65% --
16-Jun-2015 10:29 Exports YoY May -- -20.20% -14.00% --
16-Jun-2015 10:29 Imports YoY May -- -16.50% -7.50% --
16-Jun-2015 10:29 Trade Balance May -$11000.0M -$10406.2M -$10992.3M --
30-Jun-2015 17:04 Eight Infrastructure Industries May -- 4.40% -0.40% --
10-Jul-2015 17:30 Industrial Production YoY May 4.00% -- 4.10% --
10-Jul-2015 07:15 Exports YoY Jun -- -- -20.20% --
10-Jul-2015 07:15 Imports YoY Jun -- -- -16.50% --
10-Jul-2015 07:15 Trade Balance Jun -$10500.0M -- -$10406.2M --
Up
co
min
g M
ac
ro E
ve
nts
13-Jul-2015 17:30 CPI YoY Jun 5.10% -- 5.01% --
14-Jul-2015 12:00 Wholesale Prices YoY Jun -2.30% -- -2.36% --
24-Jul-2015 07:31 Eight Infrastructure Industries Jun -- -- 4.40% --
04-Aug-2015 11:00 RBI Repurchase Rate Aug-04 -- -- 7.25% --
10-Aug-2015 08:17 Exports YoY Jul -- -- -- --
10-Aug-2015 08:17 Imports YoY Jul -- -- -- --
10-Aug-2015 08:15 Trade Balance Jul -- -- -- --
12-Aug-2015 17:30 Industrial Production YoY Jun -- -- -- --
12-Aug-2015 17:30 CPI YoY Jul -- -- -- --
14-Aug-2015 12:00 Wholesale Prices YoY Jul -- -- -- --
Page 42
Spark Chitra Katha
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Absolute
Rating
Interpretation
BUY Stock expected to provide positive returns of >15% over a 1-year horizon REDUCE Stock expected to provide returns of <5% – -10% over a 1-year
horizon
ADD Stock expected to provide positive returns of >5% – <15% over a 1-year
horizon SELL Stock expected to fall >10% over a 1-year horizon
Disclaimer
(1/2)
Page 43
Spark Chitra Katha
Spark Capital and/or its affiliates and/or employees may have interests/positions, financial or otherwise in the securities mentioned in this report. To enhance transparency,
Spark Capital has incorporated a disclosure of interest statement in this document. This should however not be treated as endorsement of views expressed in this report:
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The views expressed in this research report accurately reflect the analyst’s personal views about any and all of the subject securities or issuers; and no part of the research
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Disclosure of interest statement Yes/No
Analyst financial interest in the company No
Group/directors ownership of the subject company covered No
Investment banking relationship with the company covered No
Spark Capital’s ownership/any other financial interest in the company covered No
Associates of Spark Capital’s ownership more than 1% in the company covered No
Any other material conflict of interest at the time of publishing the research report No
Receipt of compensation by Spark Capital or its Associate Companies from the subject company covered for in the last twelve months:
Managing/co-managing public offering of securities
Investment banking/merchant banking/brokerage services
products or services other than those above
in connection with research report
No
Whether Research Analyst has served as an officer, director or employee of the subject company covered No
Whether the Research Analyst or Research Entity has been engaged in market making activity of the Subject Company; No
Disclaimer
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