Ashika Monthly Insight August 2016

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AUGUST <strong>2016</strong> VALUATION AT A GLANCE 67 Oil India 370.3 22260.1 10.6 8.8 1.0 9.1 10.4 20.0 46.1 5.4 68 ONGC 221.4 189375.8 11.4 9.2 1.0 7.7 10.1 9.5 44.3 4.3 69 Oracle Financial Serv. 3724.0 31614.5 22.9 20.0 8.6 32.7 32.2 665.0 471.9 17.9 70 Petronet LNG 297.3 22297.5 N/A N/A 3.5 15.3 N/A 2.0 17.0 0.7 71 Power Finance Corp. 219.3 28948.5 N/A N/A 0.8 18.1 N/A 9.1 20.0 4.1 72 Power Grid Corp. 176.2 92180.6 11.9 10.2 2.1 14.8 17.5 2.0 22.2 1.1 73 Punjab National Bank 129.0 25320.6 N/A N/A 0.6 -8.8 N/A 0.0 N/A 0.0 74 Reliance Capital 439.3 11098.2 10.4 9.0 0.8 8.0 7.4 9.0 22.7 2.0 75 Reliance Comm. 51.4 12793.4 19.2 13.8 0.3 1.8 2.6 0.0 0.0 N/A 76 Reliance Industries 1026.4 332788.3 11.7 10.1 1.4 12.0 11.3 10.0 12.5 1.0 77 Reliance Infrastructure 573.9 15091.7 6.8 6.5 0.5 7.2 7.3 8.0 11.7 1.4 78 Rural Electrification 212.1 20944.0 N/A N/A 0.7 21.1 N/A 10.7 19.8 5.0 79 Shriram Transport Fin. 1232.9 27971.2 17.2 13.4 2.7 12.2 16.1 10.0 19.2 0.8 80 Siemens 1313.0 46758.6 66.7 52.6 9.1 24.7 14.1 6.0 30.1 0.5 81 State Bank of India 231.0 179320.2 12.5 9.6 1.0 6.6 9.5 2.6 16.5 N/A 82 Steel Authority of India 47.4 19556.0 N/A 18.0 0.5 -9.5 3.9 2.0 38.3 4.2 83 Sun Pharma. 825.5 198660.6 28.4 23.4 6.3 16.5 20.7 3.0 15.9 0.4 84 Sundaram Finance 1533.8 17040.6 N/A N/A 4.1 14.7 N/A 11.0 21.0 0.7 85 Tata Chemicals 466.7 11889.5 11.9 10.8 1.9 13.2 15.6 10.0 32.7 2.1 86 TCS 2619.3 516104.3 19.4 17.6 7.0 38.1 31.0 43.5 35.3 1.7 87 Tata Global 140.2 8845.3 20.6 18.3 1.5 5.8 8.1 2.3 43.6 1.6 88 Tata Motors 506.9 163003.2 10.8 9.2 2.1 16.1 17.8 0.2 0.6 0.0 89 Tata Power 70.7 19121.7 13.8 11.3 1.3 5.8 10.3 1.3 783.1 1.8 90 Tata Steel 349.9 33978.0 18.7 10.2 1.2 -10.2 10.1 8.0 N/A N/A 91 Tech Mahindra 485.6 47137.5 13.1 11.4 3.3 23.4 21.0 6.0 37.2 N/A 92 Titan Company 426.6 37873.0 44.5 36.8 10.9 21.0 23.4 2.2 28.3 0.5 93 UltraTech Cement 3678.8 100958.8 31.1 24.0 4.8 11.4 15.7 9.5 11.4 0.3 94 United Breweries 822.3 21740.7 57.0 46.2 10.3 14.9 17.6 1.0 10.3 0.1 95 United Spirits 2531.9 36794.8 69.3 46.2 20.6 79.1 31.0 0.0 0.0 0.0 96 UPL 610.1 26149.1 16.2 13.9 3.9 20.5 20.8 5.0 16.5 0.8 97 Vedanta 169.5 50251.6 13.1 8.6 1.1 -18.9 11.1 3.5 N/A 2.1 98 Wipro 553.8 136828.1 15.3 13.8 2.8 19.1 17.9 6.0 16.6 N/A 99 Yes Bank 1223.5 51509.1 N/A N/A 3.7 19.9 N/A 10.0 16.6 0.8 100 Zee Entertainment 484.9 46567.4 37.0 29.8 11.0 22.7 24.0 2.3 24.5 0.5 #N/A: Not Available Source: Bloomberg Consensus as on July 27, <strong>2016</strong> FY17 FY18 FY17 FY18 FY16 P/O FY16 FY16 20
STRONG ON CONSUMPTION DISCRETIONARY SPENDING Discretionary spending has strong correlation with the economic development as the individuals trends to spend more when his disposable income increase. Individual’s priority is to fulfill its basic needs and after that any residual incremental income is used to spend/invest in purchasing homes, cars, luxury items and precious metals based on their discretion. Government’s fiscal stimulus to spur economic growth by way of recommending and approving 7th Pay commission (PC) should increase the demand for owning cars, homes and luxury items. The increase in public sector wages and pensions should boost urban discretionary demand, particularly for durables such as automobiles and smaller-ticket items like clothing and footwear and recreation services. However, the impact of 6th PC had been robust owing to higher percentage hike in wages and salary and 3 years arrears as compared to 3 months arrears approved in 7th PC. Implementation of the sixth pay commission led to a rise in consumption expenditure on automobiles of more than 20% the following year, compared with 7.4% yoy in the year prior. Taking cues from previous pay commission, it boosted consumer discretionary demand, pushed up CPI inflation and increased the government’s fiscal burden. Providing fiscal stimulus by ohiking wages of central government employee also distrted the fiscal balances of the government. For example, 6th PC, which w a s i m p l e m e n t e d i n F Y 0 9 , raised t h e ce n t ral government’s wage and pension bill from 2.0% of GDP in FY08 to 2.7% in FY09 and further elevated to 3.3% in FY10. Its impact was felt for two years as the government staggered the payment of arrears accumulated owing to its delayed implementation. Combined with a slowdown in tax revenue caused by the global financial crisis, this pushed up the fiscal deficit from 2.5% of GDP in FY08 to over 6% in the subsequent two years. There was a similar impact during the implementation of the Fifth Pay Commission. Therefore the pay hikes should provide a boost to growth, partly offsetting the growing downside risks from slower global demand and still-weak private sector investment. This year monsoon would play a big role in spurting consumer demand after two consecutive year of drought. Well spread monsoon across the country would increase the productivity of rural areas, resulting in improvement in purchasing power of rural people. The demand for passenger vehicles, two wheelers, tractors, home appliances and consumer staples are directly correlated with the progress of monsoon during this year. Implementation of GST from next financial year would unlock the economic value which is concealed due to current complexity of indirect tax structure. GST bill which is seeking passage in Rajya Sabha would play a vital role in economic growth as it would simplify the current complex indirect tax structure and bring the unorganized sector under tax purview. The Centre has been pushing hard to build a consensus on the legislation so that it can finally be passed in the ongoing monsoon session of Parliament. Eventually, the implementation of GST would create a uniform tax rate which could support the growth of consumer demand going ahead. 7th Pay commission, good monsoon, effect of GST and rising middle class are the main catalysts that would drive the discretionary spending, resulting in strong demand for Auto, Real estate, Consumer durable goods and Retail Finance sectors. Rising middle class income will give discretionary spending power to people India accounts for 3% of the global middle class with 23.6 million people. A report from Credit Suisse “Global Wealth Report 2015” stated that there are 664 million adults belonging to the global middle class in 2015, or 14% of the adult population, where India has 23.6 million adults who qualified as middle class in 2015. The growth of wealth has been the fastest in India (second only to China) over 15 years (2000-2015). India added 6.7 million adults to the middle class over these 15 years, and middle-class 21
Page 1 and 2: August, 2016 Market Overview Monthl
Page 3 and 4: STRONG ON CONSUMPTION Strong influx
Page 5 and 6: STRONG ON CONSUMPTION rural develop
Page 7 and 8: STRONG ON CONSUMPTION Over the year
Page 9 and 10: STRONG ON CONSUMPTION 28/07/2016) F
Page 11 and 12: STRONG ON CONSUMPTION 28/07/2016) O
Page 13 and 14: STRONG ON CONSUMPTION Expansion to
Page 15 and 16: STRONG ON CONSUMPTION is expected t
Page 17 and 18: STRONG ON CONSUMPTION ratio also re
Page 19 and 20: STRONG ON CONSUMPTION constitute ~5
Page 21: STRONG ON CONSUMPTION FY17 FY18 FY1
Page 25 and 26: STRONG ON CONSUMPTION Source: Motil
Page 27 and 28: STRONG ON CONSUMPTION Experts’ in
Page 29 and 30: STRONG ON CONSUMPTION Information T
Page 31 and 32: STRONG ON CONSUMPTION Cloud service
Page 33 and 34: STRONG ON CONSUMPTION Infosys 24.3
Page 35 and 36: STRONG ON CONSUMPTION NNPAs of SCBs
Page 37 and 38: STRONG ON CONSUMPTION Asset quality
Page 39 and 40: STRONG ON CONSUMPTION Macroeconomic
Page 41 and 42: STRONG ON CONSUMPTION ECONOMY CHART
Page 43 and 44: STRONG ON CONSUMPTION 16 India's AA
Page 45 and 46: STRONG ON CONSUMPTION 14 Index of E
Page 47 and 48: STRONG ON CONSUMPTION Foreign Trade
Page 49 and 50: STRONG ON CONSUMPTION Public Financ
Page 51 and 52: STRONG ON CONSUMPTION HDFC Equity F
Page 53 and 54: STRONG ON CONSUMPTION Ashika Genera
Page 55 and 56: STRONG ON CONSUMPTION Key takeaways
Page 57 and 58: STRONG ON CONSUMPTION indicates tha
Page 59 and 60: STRONG ON CONSUMPTION 10 Year Bond
Page 61 and 62: STRONG ON CONSUMPTION BEST PERFORME
Page 63 and 64: STRONG ON CONSUMPTION investors, wh
Page 65 and 66: STRONG ON CONSUMPTION AUGUST 2016 1
Page 67 and 68: STRONG ON CONSUMPTION Research Team

Ashika Monthly Insight August 2016

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