INSTITUTIONAL EQUITY RESEARCH Savings, flows, and...

INSTITUTIONAL EQUITY RESEARCH

Page | 1 | PHILLIPCAPITAL INDIA RESEARCH

Savings, flows, and markets Uptrend in financial savings has just begun! INDIA | INDONOMICS | Update

10 May 2017

While it is widely believed that the slowdown in the Indian economy is/was due to poor demand (consumption) and over capacity in the private sector (poor GFCF), if we are asked to highlight one sector that really dented growth, it would be real estate led by households (not the private sector!). A significant chunk of the slowdown in GFCF and savings (key drags on growth) of the last few years came in the form of slower retail real‐estate investments. Contrary to perception, private‐ and public‐sector share actually improved. We expect this trend to reverse in FY18 (with more retail investment in realty and housing), which will gradually bring in macro‐level benefits over the next few years. The savings rate (both physical and financial) and household (HH) GFCF will rise, boosted by higher incomes from the 7th PC (centre and states combined stimulus at Rs 4.0‐4.5tn) – a trend evident during earlier PCs – and a general rise in incomes. A normal monsoon could be an added boost. Physical savings (real estate) will rise, spurred by the government’s housing sops, bottoming out of interest rates, and lower real‐estate prices, while financial savings are likely to rise due to greater earnings opportunities and awareness. Rise in physical savings will result in a rise in HH GFCF (real estate) while private and public GFCF will maintain their pace. Over the next two years, there is a good possibility of high returns from equities led by: (1) scope of a meaningful economic recovery in the next 2‐5 years, (2) higher domestic financial savings, and (3) greater FII flows. Based on macro and policy analysis, we like real estate, housing‐sector derivatives, consumer durables, and infrastructure sectors – from a medium‐ to long‐term perspective. Savings to get a boost from 7th PC: We expect savings to reasonably strengthen in FY18‐20, in line with historical trends (during previous PC implementations). The central government and a few state governments have (or will) announce higher salaries in FY17‐19; university and PSU salaries are also slated to rise. From these salary hikes, we estimate an incremental stimulus of Rs 4‐4.5tn, which will positively affect demand, consumption, savings, and HH investments. This will provide a boost for the consumer durables and real‐estate sectors. Overall, we expect gross savings to rise by Rs 17tn in FY17‐19 vs. Rs 8tn in FY14‐16, HH by Rs 10tn vs. Rs 3.3tn, private sector by Rs 6.5tn vs. Rs 4tn, and public sector by Rs 0.5tn vs. Rs 0.6tn. Real estate likely to be a preferred investment destination for 7th PC windfall: We had highlighted in our report on the impact of the 7th pay commission (February 2016), that the real estate sector could see demand returning (contrary to the consensus view) based on our survey findings – that government employees mostly preferred to invest their incremental salaries in real estate. Additionally, the government has laid down a significant focus on reviving housing demand through RERA, and sops on affordable housing. Low interest rates and correction in property prices should also aid growth. Financial savings to rise faster than physical savings: We expect the declining trend in physical savings to reverse and financial savings to rise substantially from FY18. In FY17‐19, we calculate financial savings rising by Rs 6.5‐7.0tn (vs. Rs 2.5tn in FY14‐16) and physical savings by Rs 3.0‐3.5tn (vs. Rs 0.7tn in FY14‐16). Financial savings/GDP is likely to rise to 10.5% in FY19 vs. 8% in FY16. Conversely, while physical savings will rise in absolute terms, as a proportion of GDP, they would be lower at 9% in FY19 vs. 11% in FY16. Higher financial savings and FII flows mean significant upside in Indian equities: Until FY16, savings in shares and debentures stood at 1.7% of financial savings, which we expect will rise to 4‐5% by FY20. This, along with higher HNI, corporate, and FII flows, should keep Indian stock markets buoyant. The correlation between a change in Nifty and in market flows (FII + DII) is high at 0.75. Regression analysis is significant with R‐square at 0.7; based on this, the Nifty could range between 10000‐11200 (10‐22% upside) assuming FII+DII flows at Rs 950bn/1.48tn, ceteris paribus. Our official Nifty target is at 10200. We expect flows to be strong in FY18‐19, due to improving fundamentals, higher financial savings, appreciating INR, and stable global liquidity. Expensive valuations will remain a concern.

Anjali Verma (+ 9122 6667 9969) [email protected]

http://backoffice.phillipcapital.in/Backoffice/Researchfiles/PC_-_GV_1st_Jan_2016_Issue_20160203182121.pdf



INDONOMICS UPDATE


Real estate, infrastructure, and households – The culprits of economic slowdown and THE reason for economic recovery ahead In our opinion, the sharp slowdown in savings and GFCF (key drags on growth) in the last few years was due to households’ saving and investing less in physical assets (real estate) even as private and public sector share increased. HH savings rate fell to 19% in FY16 from 23.6% in FY12 led by physical savings; the share of financial savings remained stable at 7.4%. In the same period, private‐sector savings rate rose to 11.8% from 9.5% and public sector was stagnant/marginally higher at 1.3%. HH, private, and public sector savings rate (% of GDP)

HH financial and physical savings rate (% of GDP)

Within GFCF, weakness was led by HH and the real‐estate sector; public and private sector fared well __________Current price (Rs Bn) __________ __________Constant price (Rs Bn) __________ FY13 FY14 FY15 FY16 Total FY13 FY14 FY15 FY16 TotalGFCF 3230 1905 2514 2267 9916 1452 577 1313 2034 5377Public Non‐Financial Corporations 204 379 ‐77 803 1309 16 197 ‐160 682 735Public Financial Corporations 14 36 11 ‐18 44 12 33 9 ‐19 35General Government 350 573 429 968 2320 141 398 271 866 1676Total pubilc + Government 568 989 363 1753 3673 169 628 120 1529 2446Private Non‐Financial Corporations 1885 1393 489 1411 5179 1487 1105 137 1291 4019Household Sector 767 ‐503 1659 ‐974 948 ‐205 ‐1175 1060 ‐858 ‐1178

Source: CSO, PhillipCapital India Research

‐5

0

5

10

15

20

25

30

1950

‐51

1953

‐54

1956

‐57

1959

‐60

1962

‐63

1965

‐66

1968

‐69

1971

‐72

1974

‐75

1977

‐78

1980

‐81

1983

‐84

1986

‐87

1989

‐90

1992

‐93

1995

‐96

1998

‐99

2001

‐02

2004

‐05

2007

‐08

2010

‐11

2011

‐12

2014

‐15

Household sector Private corporate sector Public sector

0

2

4

6

8

10

12

14

16

18

1950

‐51

1953

‐54

1956

‐57

1959

‐60

1962

‐63

1965

‐66

1968

‐69

1971

‐72

1974

‐75

1977

‐78

1980

‐81

1983

‐84

1986

‐87

1989

‐90

1992

‐93

1995

‐96

1998

‐99

2001

‐02

2004

‐05

2007

‐08

2010

‐11

2011

‐12

2014

‐15

Financial Asset Physical Asset

INDONOMICS UPDATE

Growth rates of GFCF and its three institutions

‐11

‐8

‐5

‐2

1

4

7

10

0

5

10

15

20

25

2012‐13 2013‐14 2014‐15 2015‐16

Total GFCF Public+Government Private sector HH Sector (rhs)

Source: CSO, PhillipCapital India Research Growth trends for Dwellings & buildings (yoy, %) Break‐up of HH GFCF (% of total) at constant price

‐10

‐8

‐6

‐4

‐2

0

2

4

6

‐5

0

5

10

15

20

25

30

2012‐13 2013‐14 2014‐15 2015‐16

Public+Government Private sector HH Sector (rhs)

Dwellings, buildings & Structures

82%

Machinery & equipment

18%

Source: CSO, PhillipCapital India Research HH GFCF and its components growth rates (%, yoy)

‐60.0

‐40.0

‐20.0

0.0

20.0

40.0

60.0

80.0

‐10

‐8

‐6

‐4

‐2

0

2

4

6

8

10

FY13 FY14 FY15 FY16

Household Sector Dwellings, buildings & StructuresMachinery & equipment (rhs)



INDONOMICS UPDATE

Demand for real estate (housing) and consumer durables to rise We see higher incomes from: (1) 7th PC (centre + state + PSUs), (2) employment generation from the government’s infrastructure investments, and (3) the rise in economic activity. These higher incomes will lead to better incremental consumption as well as savings (usually happens after PC hikes are rolled out) and an uptrend in economic growth. Based on this, we expect demand for real estate (housing), housing derivatives (building materials, home appliances, cement, housing finance), and consumer durables to rise in coming years. Government policies like GST and RERA will imply gains for organised players within these segments. Consistent and rising focus of the central government on infrastructure development also makes us positive on the infrastructure space (cement, roads, metros). Infrastructure boost – Government’s consistent focus on roads, metros and housing: Here we highlight consistent and rising spend by the central government towards infrastructure (like metros, roads, housing, and railways). In the FY18 Union Budget, the government allocated higher resources to these sectors instead of depending on IEBR (external resources) – which was what happened in the previous two years. We think this is a big positive (keeping constraints in mind) as expansion and implementation will be faster at a time when India is hungry for infrastructure investments. We had highlighted in our report that for a few more years, the government should be funding public capex (rather than institutions, with their lax administrative machinery, raising funds and deploying). Following is the budgetary spending in these sectors over the last few years: Road, Transport & Highways – Greater focus and funding • FY17RE – missed by 10%. From the budgeted amount, Rs 237bn was transferred

from revenue spending to capital spending due to scheme reclassification, pushing the capex growth rate to a statistically elevated 136%; adjusting for this, capex targets were largely met. Earlier, funds under CRF (Central Road Fund) were considered revenue spending, so reclassification was necessary.

• FY18BE – strong growth of 24% over FY17. Capex growth of 32% is substantial. The government is funding the incremental capex. IEBR (external borrowing) remains unchanged at Rs 593bn. Total capital allocation for roads (rural and urban) is Rs 839bn for FY18.

Central government spending on roads and highways ________________Rs bn________________ ____________yoy growth (%)____________ FY16 FY17BE FY17RE FY18BE FY17BE/FY16 FY17RE/FY17BE FY18BE/FY17RENational Highways Authority of India (Capital) ‐ ‐ 150 239 ‐ ‐ 59.5 Investment in NHAI 230 197 150 239 ‐14.6 ‐23.8 59.5 Transfer to Central Road Fund (CRF) ‐ ‐ 75 154 ‐ ‐ 106.4 NHAI investment met from CRF ‐165 ‐122 ‐75 ‐154 ‐26.4 ‐38.5 106.4 Transfer to Permanent Bridge Fee Fund (PBFF) ‐ ‐ 75 85 ‐ ‐ 12.8 NHAI Investment met from PBFF ‐65 ‐75 ‐75 ‐85 15.4 0.0 12.8Roads and Bridges 71 81 372 406 13.9 357.4 9.1 Revenue 25 28 111 104 12.2 291.4 ‐6.7 Capital 46 53 261 303 14.8 392.8 15.9Inter‐Account Transfers 396 495 ‐ ‐ 25.2 ‐ ‐Grand Total 469 580 524 649 23.6 ‐9.5 23.7 Revenue 194 405 113 107 109.1 ‐72.0 ‐5.5 Capital 275 175 411 542 ‐36.6 135.5 31.8 NHAI 510 789 743 832 54.7 ‐5.9 12.0Budget Support 230 197 150 239 ‐14.6 ‐23.8 59.5IEBR 280 593 593 593 111.7 0.0 0.0

Source: Budget documents, PhillipCapital India Research


http://backoffice.phillipcapital.in/Backoffice/Researchfiles/PC_-_Sovereign_Expenditure_analysis_-_July_2016_20160725152322.pdf

INDONOMICS UPDATE


Urban Development – FY17 saw a huge impetus; metros remain a key focus area • FY17RE – Sharply higher by 33% vs. FY17BE and 77% vs. FY16. Actual capital

spending by the government was much higher (49%) than initially budgeted led by higher investment in metro projects, Smart cities and AMRUT.

• FY18BE – A muted growth of 5% over FY17, contraction in revenue spending (‐3% yoy) while capex is relatively better (at 13% yoy). Higher investment will continue towards metros (up 15%) while there is a marginal drop in allocation to the Urban Rejuvenation Mission (lower spending towards smart cities, stable allocations for AMRUT and Swachh Bharat).

• In FY18, there is a sharp fall (‐85%) in IEBR while the government budgetary support is higher (up 14%).

Central government spending towards Urban Development ________________Rs bn________________ ______________yoy growth (%)______________ FY16 FY17BE FY17RE FY18BE FY17BE/FY16 FY17RE/FY17BE FY18BE/FY17RECentral Public Works Department (including training institute, R and D and Computerization)

15 10 11 11 ‐35.3 6.0 3.7

Revenue 15 10 11 11 ‐35.3 6.0 3.7 Capital MRTS and Metro Projects 93 100 157 180 7.5 57.0 14.6 Revenue 0 1 1 2 257.6 0.0 47.1 Capital 93 99 156 178 6.6 57.7 14.4Metro Projects (capital Exp) 93 99 156 178 6.6 57.8 14.4 Equity Investment 24 15 19 27 ‐37.3 22.3 45.0 Subordinate Debt 14 7 12 15 ‐50.8 84.5 18.7 Pass Through Assistance 55 77 125 136 40.3 62.5 9.4Total‐General Pool Accommodation 21 32 31 31 54.1 ‐1.7 ‐0.7 Revenue 7 16 15 16 109.5 ‐2.3 4.3 Capital 13 16 16 15 23.0 ‐1.2 ‐5.5Urban Rejuvenation Mission (Revenue) 42 73 96 90 74.3 31.0 ‐5.9 AMRUT (Atal Mission for Rejuvenation and Urban Transformation) (revenue)

27 41 49 50 51.0 19.7 2.4

Smart Cities Mission (Revenue) 15 32 47 40 117.6 45.3 ‐14.3 Swachh Bharat Mission (SBM) ‐ Urban 8 23 23 23 200.3 0.0 0.0Total 184 245 325 342 33.1 32.7 5.1 Revenue 78 130 154 149 66.3 18.0 ‐3.2 Capital 106 115 172 193 8.6 49.4 12.5 77 Metro & MRTS Projects 119 120 192 184 0.4 59.9 ‐4.2Budget Support 93 99 156 178 6.6 57.8 14.4IEBR 27 21 36 6 ‐20.8 70.0 ‐84.6


Central government spending towards housing (rural + urban) Rs Bn yoy growth (%)

FY16 FY17BE FY17RE FY18BE FY17BE/FY16 FY17RE/FY17BE FY18BE/FY17REPradhan Mantri Awas Yojna (Urban) 15 51 49 60 241.3 231.9 22.4National Urban Livelihood Mission (Ajeevika) 3 3 3 3 20.8 24.2 4.5Pradhan Mantri Awas Yojna (rural) 101 150 160 230 48.3 58.2 43.8Grand Total 119 204 213 294 71.8 4.3 38.2


INDONOMICS UPDATE


5th PC 6th PC

PC analysts’ picks HOUSING DERIVATIVES • Building materials: KEI Industries, Somany, AGL (NR) • Home appliances: Havells, Bajaj Electricals • Cement: Ultratech, Dalmia Bharat • Housing Finance: Dewan Housing Finance (NR), India Bulls (NR) CONSUMPTION BOOST • Consumer durables: KDDL, Havells, Bajaj Electricals • NBFC: Mahindra finance, Bajaj finance • Automobiles: Maruti, Hero Motocorp, Escorts INFRASTRUCTURE BOOST • Roads: PNC Infratech, KNR Construction, IRB Infra • Railways & metros: KEC, JKumar, NJCC, HCC; Beneficiaries – L&T, ABB, Siemens • Logistics: Allcargo Quantum of 7th Pay Commission boost (centre and states) We looked at the incremental rise in incomes of government employees from the payout of 7th pay commission (PC) over the next two years. Total salary hike for central government employees stood at Rs 1.2tn (effective August 2016). To gauge salary hikes for state‐government employees, we looked at their salary hikes when the 5th and 6th PCs were implemented, along with annual salary/pension trends thereafter (average rate of 15% yoy). Based on our number crunching, we expect total 7th PC payout at Rs 4.0‐4.5tn in FY17‐19. Centre and state impact of pay commissions

centre State (estimated) Increase (x)Fifth PC 185 305 1.6Sixth PC 260 905 3.5Seventh PC 1000 3500 3.5

Source: RBI, State Budgets, PhillipCapital India Research Higher salaries for government employees, along with higher incomes of non‐government employees (as GDP rises) should result in higher consumption and savings. We have noticed similar trends when previous pay commissions were implemented. State government employees’ salary and pension annual growth rate

Source: RBI, PhillipCapital India Research

‐40

‐30

‐20

‐10

0

10

20

30

40

50

60

1996

‐97

1997

‐98

1998

‐99

1999

‐00

2000

‐01

2001

‐02

2002

‐03

2003

‐04

2004

‐05

2005

‐06

2006

‐07

2007

‐08

2008

‐09

2009

‐10

2010

‐11

2011

‐12

2012

‐13

2013

‐14

2014

‐15

2015

‐16

2016

‐17

2017

‐18

Salaries growth Pension growth

We expect total 7th PC payout at Rs 4.0‐4.5tn in FY17‐19

INDONOMICS UPDATE


5th/6th PC savings trends and what we expect from the 7th PC Household savings increased substantially in both 5th and 6th PC implementations. In FY98, the household savings rate increased to 18.1% of GDP (15.8% in FY97) and continued to rise to 21.8% in FY00 (yoy growth of 27%/24%/25% in FY98/99/00). This led to a structural rise in the household savings rate. During the 6th PC, this rate increased to 23.6% in FY09 and 25.2% in FY10 (from 22.4% in FY08). It has been declining since then. Gross domestic savings rate

Source: CSO, PhillipCapital India Research Trends of HH, private, and public sector savings (% of GDP)

Source: CSO, PhillipCapital India Research The gross savings rate was 32.2% in FY16; we expect it to remain stable in FY17 and inch higher to 34‐35% in FY19. The historical high was 36.8% in FY08. We expect incremental contribution to come from HH financial savings, HH physical savings, and private sector savings. HH Financial savings: Ready to zoom! • Stood at 7.9% of GDP in FY16 vs. static 7.4% for FY12‐15. • We expect it to rise meaningfully – to 8.7%/9.7%/10.5% of GDP in FY17/18/19.

This will amount to a cumulative flow of Rs 6.5tn (vs. Rs 2.5tn in FY14‐FY16). • We anticipate higher savings in shares & debentures, pension funds, and

insurance premiums. A significant positive for equity markets.

‐10

0

10

20

30

40

50

1970

‐71

1972

‐73

1974

‐75

1976

‐77

1978

‐79

1980

‐81

1982

‐83

1984

‐85

1986

‐87

1988

‐89

1990

‐91

1992

‐93

1994

‐95

1996

‐97

1998

‐99

2000

‐01

2002

‐03

2004

‐05

2006

‐07

2008

‐09

2010

‐11

2012

‐13

2012

‐13

2014

‐15

Savings rate Savings growth rate (yoy, %)

‐5

0

5

10

15

20

25

30

1950

‐51

1953

‐54

1956

‐57

1959

‐60

1962

‐63

1965

‐66

1968

‐69

1971

‐72

1974

‐75

1977

‐78

1980

‐81

1983

‐84

1986

‐87

1989

‐90

1992

‐93

1995

‐96

1998

‐99

2001

‐02

2004

‐05

2007

‐08

2010

‐11

2011

‐12

2014

‐15

Household sector

Private corporate sector

Public sector

5th PC 6th PC

5th PC 6th PC

INDONOMICS UPDATE

Under financial savings (details available for FY15) share of currency and deposit declined while that of insurance and pension funds increased: • Currency holdings reduced to 10.7% from 11.4% in FY12. • Deposits fell, largely banking deposits (‐8.4%), while other deposits like non‐

banking and co‐operative banks increased by 0.7%/1.3%. • Share of equity/debentures in financial savings was marginally lower/unchanged

at 1.7%. In absolute terms, there was an increase in incremental savings in shares and debentures, but it was miniscule at Rs 30bn in FY15 vs. unchanged before that.

• Sharp rise over the last three years (FY13‐15) in terms of investments in insurance policies (particularly life insurance policies); however, at 21.9%, FY15 share (in total financial savings) is similar to FY12.

• At 14%, savings in provident funds for FY13‐15 were stable‐to‐lower, while they are reasonably above FY12 levels.

Trends/estimates in the financial savings rate of India

0

2

4

6

8

10

12

14

1950

‐51

1953

‐54

1956

‐57

1959

‐60

1962

‐63

1965

‐66

1968

‐69

1971

‐72

1974

‐75

1977

‐78

1980

‐81

1983

‐84

1986

‐87

1989

‐90

1992

‐93

1995

‐96

1998

‐99

2001

‐02

2004

‐05

2007

‐08

2010

‐11

2011

‐12

2014

‐15

Financial Asset5th PC 6th PC

Source: CSO, PhillipCapital India Research HH physical savings: Declining trend to reverse • Physical savings (real estate) were at a peak in FY12 at 16% of GDP – after which

they began to fall until FY16 to 10.8% of GDP. We expect these to decline to 9.0‐9.5% in FY17‐19.

• Nonetheless, in absolute terms, we estimate the net addition to real estate in FY17‐19 to still be substantial at Rs 3‐4tn vs. Rs 1tn in FY12‐16.

• Investment in real estate will kick start in FY18, we believe, supported by significant government investment and policies in affordable housing (rural and urban), low interest rates, lower realty prices, and incremental income from the 7th PC.

We had conducted a survey of central government employees (February 2016) to gauge the impact of the 7th PC. We found that 70% of the respondents said they preferred to invest their incremental income in buying real estate.


INDONOMICS UPDATE

Trends/estimates in the physical savings rate of India

0

2

4

6

8

10

12

14

16

18

1950

‐51

1953

‐54

1956

‐57

1959

‐60

1962

‐63

1965

‐66

1968

‐69

1971

‐72

1974

‐75

1977

‐78

1980

‐81

1983

‐84

1986

‐87

1989

‐90

1992

‐93

1995

‐96

1998

‐99

2001

‐02

2004

‐05

2007

‐08

2010

‐11

2011

‐12

2014

‐15

Physical Asset

6th PC5th PC

Source: CSO, PhillipCapital India Research Private sector savings: • Been gradually inching up – to 11.8% of GDP in FY16 from 9.5% of GDP in FY12. • In FY17, we see this rate falling to 11.5% and rise thereafter to 12.6% in FY19. • We base our expectation on gradual economic recovery will lead to higher

profitability for the private sector: positive for equity markets. Public sector savings: • It had fallen to 0.9% of GDP in FY15 from 1.5% in FY12. • We expect it to remain stable at the current level of 1.3% of GDP until FY19.


INDONOMICS UPDATE

5th/6th PC consumption trends and what we expect from the 7th PC In the last two PCs, private final consumption expenditure (PFCE) had responded positively to higher government employee salaries, but with a lag. During the 6th PC, it picked up after a lag of two‐years (to 9.3% in FY12 from 7.4% in FY10). During the 5th PC, the impact was immediate (PFCE growth rose to 7.8% in FY97 from 6% in FY96). It is interesting that in both previous PCs, PFCE dipped after the initial rise. For now, we expect PFCE growth rate to rise to 8.0‐8.5% by FY19 from current 7.0‐7.5%. Private Final Consumption Expenditure (PFCE)

0

2

4

6

8

10

0

10

20

30

40

50

60

70

80

1990

‐91

1991

‐92

1992

‐93

1993

‐94

1994

‐95

1995

‐96

1996

‐97

1997

‐98

1998

‐99

1999

‐00

2000

‐01

2001

‐02

2002

‐03

2003

‐04

2004

‐05

2005

‐06

2006

‐07

2007

‐08

2008

‐09

2009

‐10

2010

‐11

2011

‐12

2012

‐13

2013

‐14

2014

‐15

% of GDP yoy growth (lhs)6th PC

5th PC

Source: CSO, PhillipCapital India Research Within PFCE, we looked at various segments in order to gauge which sectors could respond positively from higher demand induced by higher income in the hands of government employees

5th PC th PC 7th PC

(Expectations) Food Up, to stable Up to stable Stable Clothing Up, with a lag of one year No change Stable to higher Rent No change Marginal increase Higher Fuel and power Sharp increase Increase Higher Furniture Increased Sharp increase Higher Health Increased Stable to higher Higher Transport Sharp increase Stable to higher Higher Education Sharp increase Stable to lower Stable, to higher Personal care Increase Increase Sharp increase Two wheeler Sharp increase Sharp increase Higher Motorcycle Sharp increase Sharp increase Higher Scooters Insignificant Sharp increase Higher Cars Increase Sharp increase Higher



INDONOMICS UPDATE


Components of PFCE – Consumer durables and semi durables likely to gain Food Clothing

Fuel Transport

Rent Furniture

‐4

‐2

0

2

4

6

8

10

0

10

20

30

40

50

60

FY91 FY93 FY95 FY97 FY99 FY01 FY03 FY05 FY07 FY09 FY11 FY13

% of PFCE yoy growth (rhs)

‐15

‐10

‐5

0

5

10

15

20

25

30

0

1

2

3

4

5

6

7

8

9



0

2

4

6

8

10

12

14

0

1

2

3

4

5



0

2

4

6

8

10

12

14

16

18

0

5

10

15

20

25



0

2

4

6

8

10

12

14

0

2

4

6

8

10

12

14



‐5

0

5

10

15

20

0

1

2

3

4

5

6



5th PC 6th PC

5th PC 6th PC 5th PC 6th PC

5th PC 6th PC


INDONOMICS UPDATE

Medical care Recreation, education

0

2

4

6

8

10

12

14

16

0

1

2

3

4

5

6



‐2

0

2

4

6

8

10

12

14

16

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5


% of PFCE yoy growth (rhs)6th PC 5th PC5th PC 6th PC

Two‐wheeler volume growth (%) Cars volume growth (%)

‐15

‐10

‐5

0

5

10

15

20

25

30 2 wheeler sales

‐20

‐10

0

10

20

30

40

50

60

70

0

500000

1000000

1500000

2000000

2500000FY ‐9

2

FY ‐9

4

FY ‐9

6

FY ‐9

8

FY ‐0

0

FY ‐0

2

FY ‐0

4

FY ‐0

6

FY ‐0

8

FY ‐1

0

FY ‐1

2

FY ‐1

4

yoy growth (rhs) Cars


Source: RBI, CSO, SIAM, PhillipCapital India Research Break‐up of Private Final Consumption Expenditure (Base: 2011‐12) __At current price, Rs Bn_ At constant price, Rs bn ________% of total________ _________% of total________Item FY13 FY14 FY15 FY16 FY13 FY14 FY15 FY16 FY12 FY13 FY14 FY15 FY16 FY12 FY13 FY14 FY15 FY16By purpose Food & non‐alcoholic beverages 2687 3285 1903 1006 879 1183 194 360 30.5 31.2 32.1 31.5 30.2 30.5 30.7 30.7 29.1 27.7Alcoholic beverages & tobacco 51 148 349 88 ‐92 2 111 ‐2 2.8 2.5 2.4 2.6 2.5 2.8 2.5 2.3 2.3 2.2Clothing and footwear 424 1068 437 462 77 617 264 428 6.3 6.2 7.0 6.9 7.0 6.3 6.2 6.9 6.9 7.1Housing, water, electricity, gas 1160 1210 1041 671 448 538 477 349 16.4 16.3 16.0 15.8 15.4 16.4 16.5 16.3 16.1 15.5Furnishings and HH equipment 214 273 227 305 112 162 148 256 3.2 3.2 3.2 3.2 3.3 3.2 3.3 3.3 3.4 3.6Health 330 345 510 431 201 184 400 367 3.7 3.8 3.8 4.1 4.3 3.7 3.9 4.0 4.4 4.7Transport 1185 754 688 1037 273 255 570 1048 15.2 15.2 14.4 13.9 14.1 15.2 14.9 14.4 14.4 15.1Communication 125 155 224 132 53 59 156 103 2.3 2.2 2.2 2.3 2.2 2.3 2.3 2.3 2.4 2.4Recreation and culture 38 59 80 68 5 27 45 45 1.0 1.0 0.9 0.9 1.0 1.0 1.0 1.0 1.0 1.0Education 291 290 333 376 113 107 128 153 3.7 3.7 3.7 3.8 3.9 3.7 3.7 3.7 3.7 3.7Restaurants and hotels 128 92 105 160 40 13 67 174 2.4 2.3 2.1 2.0 2.1 2.4 2.3 2.2 2.2 2.3Misc goods and services 1039 1078 1384 1654 597 697 1141 1180 12.9 13.0 12.9 13.5 14.5 12.9 13.4 13.7 14.8 15.6By durability Durable goods 255 71 283 529 159 40 247 477 3.1 3.1 2.8 2.9 3.4 3.1 3.2 3.1 3.3 3.8Semi‐durable goods 454 1077 663 483 81 580 457 455 7.9 7.7 8.3 8.4 8.3 7.9 7.7 8.2 8.5 8.6Non‐durable goods 3638 3940 2526 1503 892 1365 580 907 42.7 43.4 43.6 42.7 41.2 42.7 42.2 41.8 40.1 38.8Services 3326 3670 3809 3875 1575 1858 2417 2623 46.8 46.5 45.9 46.5 47.7 46.8 47.5 47.6 48.6 49.4Private Final Cons Exp 7561 8722 7341 6267 2620 3830 3760 4345 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0



INDONOMICS UPDATE

5th/6th PC HH GCF trends and what we expect from the 7th PC • Higher savings should also boost investments. This manifested after the 5th and

6th PCs. • HH GCF (current price) rose in FY98‐00 at an annual rate of 42% – from 22.7% of

GDP in FY97 to 23.8%/24.5%/24.4% in FY98/99/00. • 6th PC impact was felt in FY09‐12 when HH GCF rose at an annual rate of 28% –

from 33.3% of GDP in FY10 to 33.5% in FY11 and 35.3% in FY12. • At constant price, HH GCF rose at a rate of 21% in FY09‐12. We are positive on the housing and real estate sector Trends in HH GCF growth rates (%), at current price

‐40

‐20

0

20

40

60

80

1990

‐91

1991

‐92

1992

‐93

1993

‐94

1994

‐95

1995

‐96

1996

‐97

1997

‐98

1998

‐99

1999

‐00

2000

‐01

2001

‐02

2002

‐03

2003

‐04

2004

‐05

2005

‐06

2006

‐07

2007

‐08

2008

‐09

2009

‐10

2010

‐11

2011

‐12

2012

‐13

2013

‐14

2014

‐15

2015

‐16

5th PC 6th PC

We are positive on the housing and real estate sector


Trends in private and public GCF growth rates (%), at current price

‐40

‐20

0

20

40

60

80

100

1990

‐91

1991

‐92

1992

‐93

1993

‐94

1994

‐95

1995

‐96

1996

‐97

1997

‐98

1998

‐99

1999

‐00

2000

‐01

2001

‐02

2002

‐03

2003

‐04

2004

‐05

2005

‐06

2006

‐07

2007

‐08

2008

‐09

2009

‐10

2010

‐11

2011

‐12

2012

‐13

2013

‐14

2014

‐15

2015

‐16

Private sector Public sector



INDONOMICS UPDATE

Flows and markets – Higher flows will keep markets upbeat Here we evaluate the quantum of financial savings, particularly in the form of shares (equity), as this can reasonably boost equity markets. As of FY15, savings in shares and debentures was 1.7% of total savings. We expect this to rise to 3.5‐4.0% by FY19, implying a consistent increase in DII flows to the Indian equity markets. Additionally, we also expect FII flows to remain strong. Higher flows will mean that equity returns will remain the most attractive in the coming years, as Indian economy undergoes structural changes. To quantify the impact of higher flows on stock markets, we carried out the following exercise:

FII (Rs bn) DII (Rs bn) Total Flows YoY gr Nifty index YoY gr Nifty index changeFY08 541 478 1019 4735 24FY09 ‐491 588 97 ‐90.5 3021 ‐36 ‐1714FY10 1107 241 1348 1290.5 5249 74 2228FY11 1108 ‐187 921 ‐31.7 5834 11 585FY12 432 ‐53 378 ‐58.9 5296 ‐9 ‐538FY13 1405 ‐691 715 88.9 5683 7 387FY14 828 ‐535 292 ‐59.1 6704 18 1022FY15 1103 ‐213 890 204.5 8491 27 1787FY16 ‐92 804 712 ‐20.0 7738 ‐9 ‐753FY17 512 308 819 15.1 9174 19 1435FY18E 650 ($10bn) 300 950 15.9 10063 10 889FY18E 975 ($15bn) 500 1475 80.0 11194 22 2021FY18E 1300 ($20bn) 700 2000 144.1 12326 34 3152FY19E 1280 ($20bn) 700 1980 34.2 14296 28 3101

Source: RBI, SEBI, Bloomberg, PhillipCapital India Research Average yearly FII flows in USD and INR

Correlation between change in nifty and market flows (FII + DII) is high at 0.75. Regression analysis is significant with R‐square at 0.7

‐‐‐‐‐‐‐‐‐‐‐‐USD Bn‐‐‐‐‐‐‐‐‐‐‐‐ ‐‐‐‐‐‐‐‐‐‐‐‐Rs Bn‐‐‐‐‐‐‐‐‐‐‐‐FY05‐FY09 6 245FY10‐FY14 19 3.3 976 4.0FY15‐FY19 20 3.5 980 4.0

Source: SEBI, Bloomberg, PhillipCapital India Research Correlation between change in nifty and market flows (FII + DII) is high at 0.75. Regression analysis is significant with R‐square at 0.7 Our strategist has a Nifty target at 10200 for March 2018 based on our analysts’ EPS calculations. We attempted to carry out equity market returns based on the flows (FII + DII) through regression analysis of FII and DII flows on the Nifty. We expect FY18 flows to be strong because of improving fundamentals, higher financial savings, appreciating INR, and stable global liquidity, even as expensive valuations remain a concern. Here are our two flows‐based scenarios for FY18: Scenario 1: Nifty target of 10000 (10% return) for March 2018; assumption of FII flows ‐ US$ 10bn, DII flows – US$ 5bn (Rs 300bn). Scenario 2: Nifty target of 11200 (22% return) for March 2018, assumption of FII flows ‐ US$ 15bn, DII flows – US$ 8bn (Rs 500bn).


INDONOMICS UPDATE

Highly correlated flows and Nifty returns

‐2000

‐1500

‐1000

‐500

0

500

1000

1500

2000

2500

0

200

400

600

800

1000

1200

1400

1600

FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17

Total flows (Rs Bn) Nifty index change (rhs)

Source: Bloomberg, PhillipCapital India Research


INDONOMICS UPDATE


Management Vineet Bhatnagar (Managing Director) (91 22) 2483 1919 Kinshuk Bharti Tiwari (Head – Institutional Equity) (91 22) 6246 4101 Jignesh Shah (Head – Equity Derivatives) (91 22) 6667 9735 Research Automobiles IT Services Pharma & Specialty Chem Dhawal Doshi (9122) 6246 4128 Vibhor Singhal (9122) 6246 4109 Surya Patra (9122) 6246 4121 Nitesh Sharma, CFA (9122) 6246 4126 Shyamal Dhruve (9122) 6246 4110 Mehul Sheth (9122) 6246 4123 Banking, NBFCs Infrastructure Strategy Manish Agarwalla (9122) 6246 4125 Vibhor Singhal (9122) 6246 4109 Naveen Kulkarni, CFA, FRM (9122) 6246 4122 Pradeep Agrawal (9122) 6246 4113 Aashima Mutneja, CFA (9122) 6667 9764 Paresh Jain (9122) 6246 4114 Logistics, Transportation & Midcap Telecom Consumer & Retail Vikram Suryavanshi (9122) 6246 4111 Naveen Kulkarni, CFA, FRM (9122) 6246 4122 Naveen Kulkarni, CFA, FRM (9122) 6246 4122 Media Manoj Behera (9122) 6246 4118 Jubil Jain (9122) 6246 4117 Manoj Behera (9122) 6246 4118 Technicals Preeyam Tolia (9122) 6246 4129 Metals Subodh Gupta, CMT (9122) 6246 4136 Cement Dhawal Doshi (9122) 6246 4128 Production Manager Vaibhav Agarwal (9122) 6246 4124 Yash Doshi (9122) 6246 4127 Ganesh Deorukhkar (9122) 6667 9966 Economics Mid-Caps & Database Manager Editor Anjali Verma (9122) 6246 4115 Deepak Agarwal (9122) 6246 4112 Roshan Sony 98199 72726 Shruti Bajpai (9122) 6246 4135 Oil & Gas Sr. Manager – Equities Support Engineering, Capital Goods Sabri Hazarika (9122) 6667 9756 Rosie Ferns (9122) 6667 9971 Jonas Bhutta (9122) 6246 4119 Vikram Rawat (9122) 6246 4120 Sales & Distribution Corporate Communications Ashvin Patil (9122) 6246 4105 Sales Trader Zarine Damania (9122) 6667 9976 Shubhangi Agrawal (9122) 6246 4103 Dilesh Doshi (9122) 6667 9747 Kishor Binwal (9122) 6246 4106 Suniil Pandit (9122) 6667 9745 Bhavin Shah (9122) 6246 4102 Ashka Mehta Gulati (9122) 6246 4108 Execution Archan Vyas (9122) 6246 4107 Mayur Shah (9122) 6667 9945

Contact Information (Regional Member Companies)

SINGAPORE: Phillip Securities Pte Ltd 250 North Bridge Road, #06‐00 RafflesCityTower,

Singapore 179101 Tel : (65) 6533 6001 Fax: (65) 6535 3834

www.phillip.com.sg

MALAYSIA: Phillip Capital Management Sdn Bhd B‐3‐6 Block B Level 3, Megan Avenue II,

No. 12, Jalan Yap Kwan Seng, 50450 Kuala Lumpur Tel (60) 3 2162 8841 Fax (60) 3 2166 5099

www.poems.com.my

HONG KONG: Phillip Securities (HK) Ltd 11/F United Centre 95 Queensway Hong Kong Tel (852) 2277 6600 Fax: (852) 2868 5307

www.phillip.com.hk

JAPAN: Phillip Securities Japan, Ltd 4‐2 Nihonbashi Kabutocho, Chuo‐ku

Tokyo 103‐0026 Tel: (81) 3 3666 2101 Fax: (81) 3 3664 0141

www.phillip.co.jp

INDONESIA: PT Phillip Securities Indonesia ANZTower Level 23B, Jl Jend Sudirman Kav 33A,

Jakarta 10220, Indonesia Tel (62) 21 5790 0800 Fax: (62) 21 5790 0809

www.phillip.co.id

CHINA: Phillip Financial Advisory (Shanghai) Co. Ltd. No 550 Yan An East Road, OceanTower Unit 2318

Shanghai 200 001 Tel (86) 21 5169 9200 Fax: (86) 21 6351 2940

www.phillip.com.cn

THAILAND: Phillip Securities (Thailand) Public Co. Ltd. 15th Floor, VorawatBuilding, 849 Silom Road,

Silom, Bangrak, Bangkok 10500 Thailand Tel (66) 2 2268 0999 Fax: (66) 2 2268 0921

www.phillip.co.th

FRANCE: King & Shaxson Capital Ltd. 3rd Floor, 35 Rue de la Bienfaisance

75008 Paris France Tel (33) 1 4563 3100 Fax : (33) 1 4563 6017

www.kingandshaxson.com

UNITED KINGDOM: King & Shaxson Ltd. 6th Floor, Candlewick House, 120 Cannon Street

London, EC4N 6AS Tel (44) 20 7929 5300 Fax: (44) 20 7283 6835

www.kingandshaxson.com

UNITED STATES: Phillip Futures Inc. 141 W Jackson Blvd Ste 3050

The Chicago Board of TradeBuilding Chicago, IL 60604 USA

Tel (1) 312 356 9000 Fax: (1) 312 356 9005

AUSTRALIA: PhillipCapital Australia Level 10, 330 Collins Street

Melbourne, VIC 3000, Australia Tel: (61) 3 8633 9800 Fax: (61) 3 8633 9899

www.phillipcapital.com.au

SRI LANKA: Asha Phillip Securities Limited Level 4, Millennium House, 46/58 Navam Mawatha,

Colombo 2, Sri Lanka Tel: (94) 11 2429 100 Fax: (94) 11 2429 199

www.ashaphillip.net/home.htm

INDIA PhillipCapital (India) Private Limited

No. 1, 18th Floor, Urmi Estate, 95 Ganpatrao Kadam Marg, Lower Parel West, Mumbai 400013 Tel: (9122) 2300 2999 Fax: (9122) 6667 9955 www.phillipcapital.in

http://www.phillip.com.sg/

http://www.poems.com.my/

http://www.phillip.com.hk/

http://www.phillip.co.jp/

http://www.phillip.co.id/

http://www.phillip.com.cn/

http://www.phillip.co.th/

http://www.kingandshaxson.com/

http://www.kingandshaxson.com/

http://www.phillipcapital.com.au/

http://www.ashaphillip.net/home.htm

http://www.phillipcapital.in/

INDONOMICS UPDATE

Disclosures and Disclaimers PhillipCapital (India) Pvt. Ltd. has three independent equity research groups: Institutional Equities, Institutional Equity Derivatives, and Private Client Group. This report has been prepared by Institutional Equities Group. The views and opinions expressed in this document may, may not match, or may be contrary at times with the views, estimates, rating, and target price of the other equity research groups of PhillipCapital (India) Pvt. Ltd.

This report is issued by PhillipCapital (India) Pvt. Ltd., which is regulated by the SEBI. PhillipCapital (India) Pvt. Ltd. is a subsidiary of Phillip (Mauritius) Pvt. Ltd. References to "PCIPL" in this report shall mean PhillipCapital (India) Pvt. Ltd unless otherwise stated. This report is prepared and distributed by PCIPL for information purposes only, and neither the information contained herein, nor any opinion expressed should be construed or deemed to be construed as solicitation or as offering advice for the purposes of the purchase or sale of any security, investment, or derivatives. The information and opinions contained in the report were considered by PCIPL to be valid when published. The report also contains information provided to PCIPL by third parties. The source of such information will usually be disclosed in the report. Whilst PCIPL has taken all reasonable steps to ensure that this information is correct, PCIPL does not offer any warranty as to the accuracy or completeness of such information. Any person placing reliance on the report to undertake trading does so entirely at his or her own risk and PCIPL does not accept any liability as a result. Securities and Derivatives markets may be subject to rapid and unexpected price movements and past performance is not necessarily an indication of future performance.

This report does not regard the specific investment objectives, financial situation, and the particular needs of any specific person who may receive this report. Investors must undertake independent analysis with their own legal, tax, and financial advisors and reach their own conclusions regarding the appropriateness of investing in any securities or investment strategies discussed or recommended in this report and should understand that statements regarding future prospects may not be realised. Under no circumstances can it be used or considered as an offer to sell or as a solicitation of any offer to buy or sell the securities mentioned within it. The information contained in the research reports may have been taken from trade and statistical services and other sources, which PCIL believe is reliable. PhillipCapital (India) Pvt. Ltd. or any of its group/associate/affiliate companies do not guarantee that such information is accurate or complete and it should not be relied upon as such. Any opinions expressed reflect judgments at this date and are subject to change without notice.

Important: These disclosures and disclaimers must be read in conjunction with the research report of which it forms part. Receipt and use of the research report is subject to all aspects of these disclosures and disclaimers. Additional information about the issuers and securities discussed in this research report is available on request.

Certifications: The research analyst(s) who prepared this research report hereby certifies that the views expressed in this research report accurately reflect the research analyst’s personal views about all of the subject issuers and/or securities, that the analyst(s) have no known conflict of interest and no part of the research analyst’s compensation was, is, or will be, directly or indirectly, related to the specific views or recommendations contained in this research report.

Additional Disclosures of Interest: Unless specifically mentioned in Point No. 9 below: 1. The Research Analyst(s), PCIL, or its associates or relatives of the Research Analyst does not have any financial interest in the company(ies) covered in

this report. 2. The Research Analyst, PCIL or its associates or relatives of the Research Analyst affiliates collectively do not hold more than 1% of the securities of the

company (ies)covered in this report as of the end of the month immediately preceding the distribution of the research report. 3. The Research Analyst, his/her associate, his/her relative, and PCIL, do not have any other material conflict of interest at the time of publication of this

research report. 4. The Research Analyst, PCIL, and its associates have not received compensation for investment banking or merchant banking or brokerage services or for

any other products or services from the company(ies) covered in this report, in the past twelve months. 5. The Research Analyst, PCIL or its associates have not managed or co‐managed in the previous twelve months, a private or public offering of securities for

the company (ies) covered in this report. 6. PCIL or its associates have not received compensation or other benefits from the company(ies) covered in this report or from any third party, in

connection with the research report. 7. The Research Analyst has not served as an Officer, Director, or employee of the company (ies) covered in the Research report. 8. The Research Analyst and PCIL has not been engaged in market making activity for the company(ies) covered in the Research report. 9. Details of PCIL, Research Analyst and its associates pertaining to the companies covered in the Research report: Sr. no. Particulars Yes/No

1 Whether compensation has been received from the company(ies) covered in the Research report in the past 12 months for investment banking transaction by PCIL

No

2 Whether Research Analyst, PCIL or its associates or relatives of the Research Analyst affiliates collectively hold more than 1% of the company(ies) covered in the Research report

No

3 Whether compensation has been received by PCIL or its associates from the company(ies) covered in the Research report No4 PCIL or its affiliates have managed or co‐managed in the previous twelve months a private or public offering of securities for the

company(ies) covered in the Research report No

5 Research Analyst, his associate, PCIL or its associates have received compensation for investment banking or merchant banking or brokerage services or for any other products or services from the company(ies) covered in the Research report, in the last twelve months

No

Independence: PhillipCapital (India) Pvt. Ltd. has not had an investment banking relationship with, and has not received any compensation for investment banking services from, the subject issuers in the past twelve (12) months, and PhillipCapital (India) Pvt. Ltd does not anticipate receiving or intend to seek compensation for investment banking services from the subject issuers in the next three (3) months. PhillipCapital (India) Pvt. Ltd is not a market maker in the securities mentioned in this research report, although it, or its affiliates/employees, may have positions in, purchase or sell, or be materially interested in any of the securities covered in the report.

Suitability and Risks: This research report is for informational purposes only and is not tailored to the specific investment objectives, financial situation or particular requirements of any individual recipient hereof. Certain securities may give rise to substantial risks and may not be suitable for certain investors. Each investor must make its own determination as to the appropriateness of any securities referred to in this research report based upon the legal, tax and accounting considerations applicable to such investor and its own investment objectives or strategy, its financial situation and its investing experience. The value of any security may be positively or adversely affected by changes in foreign exchange or interest rates, as well as by other financial, economic, or political factors. Past performance is not necessarily indicative of future performance or results.



INDONOMICS UPDATE

Sources, Completeness and Accuracy: The material herein is based upon information obtained from sources that PCIPL and the research analyst believe to be reliable, but neither PCIPL nor the research analyst represents or guarantees that the information contained herein is accurate or complete and it should not be relied upon as such. Opinions expressed herein are current opinions as of the date appearing on this material, and are subject to change without notice. Furthermore, PCIPL is under no obligation to update or keep the information current. Without limiting any of the foregoing, in no event shall PCIL, any of its affiliates/employees or any third party involved in, or related to computing or compiling the information have any liability for any damages of any kind including but not limited to any direct or consequential loss or damage, however arising, from the use of this document.

Copyright: The copyright in this research report belongs exclusively to PCIPL. All rights are reserved. Any unauthorised use or disclosure is prohibited. No reprinting or reproduction, in whole or in part, is permitted without the PCIPL’s prior consent, except that a recipient may reprint it for internal circulation only and only if it is reprinted in its entirety.

Caution: Risk of loss in trading/investment can be substantial and even more than the amount / margin given by you. Investment in securities market are subject to market risks, you are requested to read all the related documents carefully before investing. You should carefully consider whether trading/investment is appropriate for you in light of your experience, objectives, financial resources and other relevant circumstances. PhillipCapital and any of its employees, directors, associates, group entities, or affiliates shall not be liable for losses, if any, incurred by you. You are further cautioned that trading/investments in financial markets are subject to market risks and are advised to seek independent third party trading/investment advice outside PhillipCapital/group/associates/affiliates/directors/employees before and during your trading/investment. There is no guarantee/assurance as to returns or profits or capital protection or appreciation. PhillipCapital and any of its employees, directors, associates, and/or employees, directors, associates of PhillipCapital’s group entities or affiliates is not inducing you for trading/investing in the financial market(s). Trading/Investment decision is your sole responsibility. You must also read the Risk Disclosure Document and Do’s and Don’ts before investing.

Kindly note that past performance is not necessarily a guide to future performance.

For Detailed Disclaimer: Please visit our website www.phillipcapital.in

For U.S. persons only: This research report is a product of PhillipCapital (India) Pvt Ltd., which is the employer of the research analyst(s) who has prepared the research report. The research analyst(s) preparing the research report is/are resident outside the United States (U.S.) and are not associated persons of any U.S.‐regulated broker‐dealer and therefore the analyst(s) is/are not subject to supervision by a U.S. broker‐dealer, and is/are not required to satisfy the regulatory licensing requirements of FINRA or required to otherwise comply with U.S. rules or regulations regarding, among other things, communications with a subject company, public appearances, and trading securities held by a research analyst account.

This report is intended for distribution by PhillipCapital (India) Pvt Ltd. only to "Major Institutional Investors" as defined by Rule 15a‐6(b)(4) of the U.S. Securities and Exchange Act, 1934 (the Exchange Act) and interpretations thereof by the U.S. Securities and Exchange Commission (SEC) in reliance on Rule 15a 6(a)(2). If the recipient of this report is not a Major Institutional Investor as specified above, then it should not act upon this report and return the same to the sender. Further, this report may not be copied, duplicated, and/or transmitted onward to any U.S. person, which is not a Major Institutional Investor. In reliance on the exemption from registration provided by Rule 15a‐6 of the Exchange Act and interpretations thereof by the SEC in order to conduct certain business with Major Institutional Investors, PhillipCapital (India) Pvt Ltd. has entered into an agreement with a U.S. registered broker‐dealer, Decker & Co, LLC. Transactions in securities discussed in this research report should be effected through Decker & Co, LLC or another U.S. registered broker dealer. If Distribution is to Australian Investors This report is produced by PhillipCapital (India) Pvt Ltd and is being distributed in Australia by Phillip Capital Limited (Australian Financial Services Licence No. 246827). This report contains general securities advice and does not take into account your personal objectives, situation and needs. Please read the Disclosures and Disclaimers set out above. By receiving or reading this report, you agree to be bound by the terms and limitations set out above. Any failure to comply with these terms and limitations may constitute a violation of law. This report has been provided to you for personal use only and shall not be reproduced, distributed or published by you in whole or in part, for any purpose. If you have received this report by mistake, please delete or destroy it, and notify the sender immediately. PhillipCapital (India) Pvt. Ltd. Registered office: No. 1, 18th Floor, Urmi Estate, 95 Ganpatrao Kadam Marg, Lower Parel West, Mumbai 400013

http://www.phillipcapital.in/

INSTITUTIONAL EQUITY RESEARCH Savings, flows, and...

Documents

Transcript of INSTITUTIONAL EQUITY RESEARCH Savings, flows, and...