STRATEGY | March 2016 March 2016
Indian Equities – Time-In or Timing?
Definition of InvestingM
ar-7
9
Mar
-81
Mar
-83
Mar
-85
Mar
-87
Mar
-89
Mar
-91
Mar
-93
Mar
-95
Mar
-97
Mar
-99
Mar
-01
Mar
-03
Mar
-05
Mar
-07
Mar
-09
Mar
-11
Mar
-13
Mar
-150
20
40
60
80
100
120
5.6
INR100 of 1979 can only buy goods “worth” INR
5.6 today!
After factoring in the Consumer Price In-
flation Index
100
2
Mar
-79
Mar
-81
Mar
-83
Mar
-85
Mar
-87
Mar
-89
Mar
-91
Apr-
93
Apr-
95
Apr-
97
Apr-
99
Apr-
01
Apr-
03
Apr-
05
May
-07
May
-09
May
-11
May
-13
May
-15 50
70
90
110
130
150
Purc
hasin
g Po
wer
104
100
Fixed deposit would have preserved your Purchasing Power
3
4
Mar
-79
Mar
-81
Mar
-83
Mar
-85
Mar
-87
Mar
-89
Mar
-91
Apr-
93
Apr-
95
Apr-
97
Apr-
99
Apr-
01
Apr-
03
Apr-
05
May
-07
May
-09
May
-11
May
-13
May
-15 50
100
150
200
250
300
350
Purc
hasin
g Po
wer
214
100
Gold would have doubled your Purchasing Power
5
Mar
-79
Mar
-81
Mar
-83
Mar
-85
Mar
-87
Mar
-89
Mar
-91
Apr-
93
Apr-
95
Apr-
97
Apr-
99
Apr-
01
Apr-
03
Apr-
05
May
-07
May
-09
May
-11
May
-13
May
-150
250
500
750
1,000
1,250
1,500
1,750
Purc
hasin
g Po
wer
1,567
Equities would have multiplied your Purchasing Power 15x
Mar
-79
Mar
-81
Mar
-83
Mar
-85
Mar
-87
Mar
-89
Mar
-91
Apr-
93
Apr-
95
Apr-
97
Apr-
99
Apr-
01
Apr-
03
Apr-
05
May
-07
May
-09
May
-11
May
-13
May
-150
10,000
20,000
30,000
40,000
50,000Sensex Sensex cum Dividend Fixed Deposit Gold
Nom
inal
Val
ue
If you had invested Rs100 ...
Over the last 100 years -- > S&P 500 rose 273x -->Include dividends, it rose 18,520x!
47,682
27,828
3,808
1,842
6
Key Objectives of Investing: Over 36 years --> 18x Vs 38x Vs 476x
7
Macros: Read, Discussed, Debated Threadbare!
Feb-07: Rising default rate hits
subprime mortgage industry in US
Jan-
07
Jun-
07
Oct
-07
Mar
-08
Aug-
08
Jan-
09
Jun-
09
Nov
-09
Apr-
10
Sep-
10
Feb-
11
Jul-1
1
Dec-
11
May
-12
Oct
-12
Mar
-13
Jul-1
3
Dec-
13
May
-14
Oct
-14
Mar
-155,000
10,000
15,000
20,000
25,000
30,000
Sensex Index
Feb-07: Rising default rate hits sub-
prime mortgage industry
in US
Oct-09: Greece public finance weakness re-
vealed triggering sovereign
debt crisis
Aug-11: S&P down-grades US Sovereign
Sep-14: Brent crude goes below USD100/bbl
Mar-15: Taper tantrum II
(FED rate hike fear)
Dec-14: Rouble tumbles
Sep-08: US Govern-ment takes over Fannie Mae and
Freddie Mac, Merril Lynch sold to BoA, Lehman Brothers
collapse
May-10: 750b Euro Stabilization package to PIIGS
countries
8
Macros push you out of Time-in & into TIMING
9
Stocks are SLAVES OF EARNINGS
Knowable but Unimportant
Important & Knowable
Unknowable & Unimportant
Important But Unknowable
UNIMPORTANT IMPORTANT
KNOWABLE
UNKNOWABLE
1984-2013 S&P 500 returned 11.1% CAGR Avg returns earned by investors in Equity mutual funds was
a paltry 3.7%!!
Bond Index returned 7.7% CAGR Avg returns earned by investors in Bond funds was a paltry
0.7%!!
10
Earnings growth / Stock Returns captured by -->Time-In & Not Timing, stupid!
11
The most powerful concept of Finance
The most powerful concept of Finance -> The idea that a $ saved today will grow to be worth more than a $ tomorrow
The greatest shortcoming of the human race is our inability to understand the exponential function
DID YOU KNOW -> It's hard to believe that $65.7 billion of Warren Buffett's $66 billion net worth came after his 50th birthday. But it did.
He who understands it, earns it…He who doesn’t…pays it! - Albert Einstein
12
Compound Interest: The Eighth Wonder of World
STRATEGY | March 2016 13
INDIAN EQUITIES – TIME IN OR TIMING?India Macro The missing "G" (QLP are in place!)
India Corporate The worst is behind
India Valuations Quite reasonable
India Flows The tide has turned
India Outlook Best is ahead
STRATEGY | March 2016 14
Macro: On a very strong footingGovernment steadfast on the fiscal consolidation roadmap CAD-GDP ruling well within sustainable level of 3%
Comfortable forex reserves built up while allowing INR to depreciate nominally
Inflation came down to decadal lows; deflationary condition prevails for the wholesale prices
FY10
FY11
FY12
FY13
FY14
FY15
FY16
E
FY17
E
-2.8 -2.6
-4.2
-4.7
-1.7-1.4
-0.7 -0.7
CAD/GDP (%)
FY10
FY11
FY12
FY13
FY14
FY15
FY16
E
FY17
E
6.5
4.9
5.9
4.9 4.44.1 3.9
3.5
Fiscal deficit (Centre, %)
FY10
FY11
FY12
FY13
FY14
FY15
FY16
E
FY17
E
12.410.5 10.5 10.2 9.5
6.04.9
3.53.6
9.6 8.97.4
6.0
2.0-2.5 0.3
CPI Inflation (YoY%) WPI Inflation (YoY%)
FY10
FY11
FY12
FY13
FY14
FY15
FY16
E
FY17
E
279 305 294 293 304 341 351 360
4746
48
54
60 61
65 67Forex reserves INR
STRATEGY | March 2016 15
Growth: Is the only missing linkNominal GDP growth has collapsed Witnessing deflation (nominal GDP near real) first time in four
decades
New projects have dried up, moderate increase in projects under implementation
Real indicators of volume growth of industrial production remains weak
FY10
FY11
FY12
FY13
FY14
FY15
FY16
E
15.1
20.2
15.7
13.9 13.3
10.8
8.6
Nominal GDP growth (YoY%)
FY60
FY62
FY64
FY66
FY68
FY70
FY72
FY74
FY76
FY78
FY80
FY82
FY84
FY86
FY88
FY90
FY92
FY94
FY96
FY98
FY00
FY02
FY04
FY06
FY08
FY10
FY12
FY14
FY16
-5
0
5
10
15
20
40 years!
FY05
FY06
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
FY16
E
11.08.6
12.915.5
2.5
5.3
8.2
2.91.1
-0.1
2.8 2.7
IIP (YoY%)
Jun-
10Se
p-10
Dec-
10M
ar-1
1Ju
n-11
Sep-
11De
c-11
Mar
-12
Jun-
12Se
p-12
Dec-
12M
ar-1
3Ju
n-13
Sep-
13De
c-13
Mar
-14
Jun-
14Se
p-14
Dec-
14M
ar-1
5Ju
n-15
Sep-
15De
c-15
-2500
0
2500
5000
New projectsIncrease in under implementation projects
STRATEGY | March 2016 16
Government: Once in a lifetime leadership change Government attempting a non-inflationary supply boost while ensuring a safety net
Some more measures in the offingImproving “Doing Business” was a key focus of the government
Topics DB 2015 Rank DB 2016 RankStarting a Business 164 155Dealing with Construction Permits 184 183Getting Electricity 99 70Registering Property 138 138Getting Credit 36 42Protecting Minority Investors 8 8Paying Taxes 156 157Trading Across Borders 133 133Enforcing Contracts 178 178Resolving Insolvency 136 136
21% increase in capital outlay in
FY17 Budget
Passage of Real Estate
Regulatory Bill
Key bills in the offing
include GST, Bankruptcy code,
National Waterways bill,
STRATEGY | March 2016 17
RBI: Has gained credibility globallyFive focus areas of RBI REER tended to appreciate during Rajan's tenure
Expect 100bp cut in policy rates by FY17INR emerged strongest EM currency in 2015
Low inflation
Improved transmission
Stable currency
Financial stability
Clean up of banks
Apr-
11Ju
n-11
Aug-
11O
ct-1
1De
c-11
Feb-
12Ap
r-12
Jun-
12Au
g-12
Oct
-12
Dec-
12Fe
b-13
Apr-
13Ju
n-13
Aug-
13O
ct-1
3De
c-13
Feb-
14Ap
r-14
Jun-
14Au
g-14
Oct
-14
Dec-
14Fe
b-15
Apr-
15Ju
n-15
Aug-
15O
ct-1
5De
c-15
Feb-
16
95
100
105
110
115
120REER
Dr. Rajan as-sumes office
Jan-
13M
ar-1
3M
ay-1
3Ju
l-13
Sep-
13N
ov-1
3Ja
n-14
Mar
-14
May
-14
Jul-1
4Se
p-14
Nov
-14
Jan-
15M
ar-1
5M
ay-1
5Ju
l-15
Sep-
15N
ov-1
5Ja
n-16
Mar
-16
May
-16
Jul-1
6Se
p-16
Nov
-16
Jan-
17M
ar-1
74
6
8
10
8.00
7.25
8.00
7.75
7.25
6.75
5.75
Repo Rate
INR
CNY
SGD
THB
IDR
MYR
RUB
ZAR
-4.4 -4.6-7.1
-9.5 -9.9
-22.8-25.0
-34.2
2015
STRATEGY | March 2016 18
Global & Domestic cyclicals: Earnings collapse PAT (INR b)
85% fall from peak
58% fall from peak
48% fall from peak
33% fall from peak
STRATEGY | March 2016 19
But, diversity of corporate India has come to rescuePAT (INR b)
230% rise 164% rise
130% rise 214% rise
STRATEGY | March 2016 20
Share of global cyclicals decline to a new lowPAT share down to multi-year low
Defensive includes Consumer, Healthcare, Technology, Telecom and UtilitiesGlobal cyclicals includes Metals, Oil & Gas and JLRDomestic cyclicals includes Automobiles, Banks, Capital Goods, Cement, Media, NBFCs, Real Estate and Retail
36 40 38 36 33 37 37 36 35 37 38 32
42
36 25 2638 43 37 36 34 31 28 24
25 19
28 24 25 25 30 34 35 39
4540
0%10%20%30%40%50%60%70%80%90%
100%M
ar-0
8Ju
ne-0
8Se
p-08
Dec-
08M
ar-0
9Ju
ne-0
9Se
p-09
Dec-
09M
ar-1
0Ju
ne-1
0Se
p-10
Dec-
10M
ar-1
1Ju
ne-1
1Se
p-11
Dec-
11M
ar-1
2Ju
ne-1
2Se
p-12
Dec-
12M
ar-1
3Ju
ne-1
3Se
p-13
Dec-
13M
ar-1
4Ju
ne-1
4Se
p-14
Dec-
14M
ar-1
5Ju
ne-1
5Se
p-15
Dec-
15M
ar-1
6E
Defensives
Global cyclicals
Domestic cyclicals
STRATEGY | March 2016 21
Corporate Profit to GDP has halvedCorporate Profit to GDP (%)
FY04
FY05
FY06
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
FY16
E
4.7
5.4
6.2
7.3
7.8
5.5 6.5
6.2
4.94.6
4.3
4.03.9
Average of 5.5%
STRATEGY | March 2016 22
And Corporate profitability has collapsed
FY04
FY05
FY06
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
FY16
E
16.3 16.3 16.4
17.2
16.1
14.314.8 14.6
13.1
12.5
11.9
11.6 11.0
Corporate PAT Margin (%)
Average :14.3%
STRATEGY | March 2016
26 23
42
52
82 83
103
55
9588
7164 66
81
68
FY02
FY03
FY04
FY05
FY06
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
FY16
E
Average of 66% for the period
23
Markets valuations below averages, on lowest marginsSensex P/E (x) Sensex P/B (x)
Market Cap to GDP (%)Trend in India's contribution to world market cap (%)
4.2
1.6
2.5
1.5
2.2
2.9
3.6
4.3
Mar
-06
Mar
-07
Mar
-08
Mar
-09
Mar
-10
Mar
-11
Mar
-12
Mar
-13
Mar
-14
Mar
-15
Mar
-16
10 Year Avg: 2.7x
24.6
10.7
15.8
9
13
17
21
25
Mar
-06
Mar
-07
Mar
-08
Mar
-09
Mar
-10
Mar
-11
Mar
-12
Mar
-13
Mar
-14
Mar
-15
Mar
-16
10 Year Avg: 16.7x
3.03.3
1.6
2.2
0.75
1.50
2.25
3.00
3.75
Feb
-06
Aug
-06
Jan
-07
Jun
-07
Nov
-07
Apr-
08O
ct-0
8M
ar-0
9Au
g-0
9Ja
n-1
0Ju
n-1
0De
c-1
0M
ay-1
1O
ct-1
1M
ar-1
2Au
g-1
2Ja
n-1
3Ju
l-13
Dec
-13
May
-14
Oct
-14
Mar
-15
Sep
-15
Feb
-16
India's Contribution to World Mcap (%)
Average of 2.3%
STRATEGY | March 2016 24
What drove FII selling: Downgrades + Valuation + OverweightTrend in Sensex EPS Revision FY14 Trend in Sensex EPS Revision FY15
Trend in Sensex EPS Revision FY16
11% downgrade
1,76
6
1,79
3
1,83
6
1,85
4
1,87
5
1,86
6
1,76
1
1,69
8
1,66
2
1,60
5
1,56
1
1,51
5
1,47
1
1,43
5
1,36
6
1,33
2
16.317.5
20.5 21.0 21.4 22.1 19.9 19.7 18.4 18.515.3
11.98.7
6.00.9
-1.6
Dec 13
Mar 14
June 14
Aug 14
Sep 14
Nov 14
Dec 14
Feb 15
Mar 15
May 15
June 15
Aug 15
Sep 15
Nov 15
Dec 15
Feb 16
FY16 EPS (INR) FY16 EPS Growth YoY (%)
24% downgrade
MSCI India v/s EM P/E premium/Discount (%)
84
0
25
50
75
100
125
Feb-
06Au
g-06
Feb-
07Au
g-07
Feb-
08Au
g-08
Feb-
09Au
g-09
Feb-
10Au
g-10
Feb-
11Au
g-11
Feb-
12Au
g-12
Feb-
13Au
g-13
Feb-
14Au
g-14
Feb-
15Au
g-15
Feb-
16
MSCI India Vs EM PE Premium (%)
Average of 58%
STRATEGY | March 2016 25
Crystal ball gazing the FutureShort term hazy, Long term clear
STRATEGY | March 2016 26
Case for India emerging as an asset class22 34 59 15
5 301 465
475
494
524
618
721
834
948 1,
239
1,22
61,
366
1,70
81,
879
1,82
81,
864
2,04
22,
074
2,24
92,
453
2,70
22,
976
3,27
83,
611 3,97
7
FY51
FY60
FY70
FY80
FY90
FY00
FY01
FY02
FY03
FY04
FY05
FY06
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
FY16
EFY
17E
FY18
EFY
19E
FY20
EFY
21E
FY22
EFY
23E
1st US$ tn
2nd US$ tn7 years
58 years
3rd US$ tn
4th US$ tn3 years
5 years
The Next Trillion Dollar opportunityIndia GDP trend (USD B)
FY51-08: 7.3% CAGRFY08-15: 7.4% CAGR
Top 10 GDP countries
Rank CountryDec 2015 GDP (USD
b)
1 United States 17,968
2 China 11,385
3 Japan 4,116
4 Germany 3,371
5 United Kingdom 2,865
6 France 2,423
7 India 2,183
8 Italy 1,819
9 Brazil 1,800
10 Canada 1,573
India GDP (USD b)
STRATEGY | March 2016 27
Domestic buying would dwarf FII flowsTrend in DII Flows (USDb)
0.3 0.13.2
6.4
17.713.1
5.1
-4.1-0.9
-12.7-8.9
-3.7
13.7 11.8 13.3 14.9 16.7
0.4 0.2 3.3 6.0 12.3 10.5 3.1 -2.4 -0.7 -9.7 -6.6 -2.3 7.9 6.0 6.0 6.0 6.0
FY04
FY05
FY06
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
FY16
E
FY17
E
FY18
E
FY19
E
FY20
E
DII Flows (USD b) DII as % to Financial Savings
USD 28bAvg DII/FS of 4.4%
USD -12bAvg DII/FS of 1.2%
DII as % to Financial Savings
STRATEGY | March 2016 28
Sub-par earnings growth for 8 years nowSensex EPS: Rebound in FY16-18 with 19% CAGR Versus 6% CAGR during FY08-16
FY93
FY94
FY95
FY96
FY97
FY98
FY99
FY00
FY01
FY02
FY03
FY04
FY05
FY06
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
FY16
E
FY17
E
FY18
E
81 129 181250 266 291 278 280
216 236 272361
446540
720 833 820 8341,024
1,1201,182
1,338 1,3541,332
1,550
1,890
FY93-96: 45% CAGR
FY96-03: 1% CAGR
FY03-08: 25% CAGR
FY08-16:6% CAGR
FY16-18E: 19% CAGR
FY93-FY15: 14% CAGR
STRATEGY | March 2016 29
Corporate Profit to GDP has hit the bottomFY
04
FY05
FY06
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
FY16
E
FY17
E
FY18
E
FY19
E
FY20
E
3.0
4.0
5.0
6.0
7.0
8.0
4.7
5.4
6.2
7.37.8
5.5
6.5
6.2
4.9
4.6
4.34.0
3.9
4.29508747428241
4.69017494856481
5.08526242284723
5.48034989712963
4.55940293552705
5.21880587105411
5.87820880658116
6.6
Corp Profit to GDP (%) Average Average Plus
Corporate Profit to GDPAverage: 5.5%Average Plus: 6.6%High:7.8%
STRATEGY | March 2016 30
REVERSION TO MEAN = 24% EPS CAGR
Note: Nominal GDP Growth & Sales Growth estimate of 11-12% in FY17-FY20
FY04
FY05
FY06
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
FY16
E
FY17
E
FY18
E
FY19
E
FY20
E0
900
1,800
2,700
3,600
4,50036
1 446 54
0
720 83
3
820 83
4
1,02
4 1,12
0
1,18
2 1,33
8
1,35
4
1,33
2
1672.045933965
2081.14602113218
2571.95993617175
3159.34051222233
1823.08507764202
2443.03784321804
3221.54462378585
4194.67538568568
Sensex EPS (INR) Average Average Plus
24% CAGR
33% CAGR
STRATEGY | March 2016 31
And stocks are slaves of earnings!Sensex Index
FY04
FY05
FY06
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
FY16
E
FY17
E
FY18
E
FY19
E
FY20
E5,000
25,000
45,000
65,000
85,000
5,59
1
6,49
3 11,2
80 13,0
72
15,6
44
9,70
9
17,5
28
19,4
45
17,4
04
18,8
36 22,3
86 27,9
57
24,8
04
30657.9989043531
37563.3874853518
45686.0648737402
55215.4421470222
34232.0683959918
46251.9248228156
61490.4990046237
80715.6563185348
Average Average Plus
22% CAGR
34% CAGR
39% CAGR
6% CAGR
Trailing PEAverage: 17.5xAverage Plus: 19.2xHigh:25.2x
STRATEGY | March 2016 32
Corporate Profit Margins have hit the bottom
Note: Nominal GDP Growth & Sales Growth estimate of 11-12% in FY17-FY20
FY04
FY05
FY06
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
FY16
E
FY17
E
FY18
E
FY19
E
FY20
E
8.0
11.0
14.0
17.0
20.0
16.3 16.3 16.4
17.2
16.1
14.3
14.814.6
13.1
12.511.9
11.6
11.0
11.8275494722137
12.65528187120513.4830142701962
14.3107466691875
12.1856702301035
13.3715233869847
14.5573765438658
15.7432297007469
Corporate PAT Margin (%)
Corporate PAT MarginAverage: 14.3%Average Plus: 15.7%High:17.2%
STRATEGY | March 2016 33
REVERSION TO MEAN = 25% EPS CAGR
FY04
FY05
FY06
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
FY16
E
FY17
E
FY18
E
FY19
E
FY20
E0
1,000
2,000
3,000
4,000
5,00036
1 446 54
0
720 83
3
820 83
4
1,02
4 1,12
0
1,18
2 1,33
8
1,35
4
1,33
2
1670.38941011315
2084.48952223047
2590.11965250499
3206.26981092494
1869.90898460108
2600.18930275587
3587.23828850877
4916.1369706205
Sensex EPS (INR) Average Average Plus
25% CAGR
39% CAGR
STRATEGY | March 2016 34
And stocks are slaves of earnings!
FY04
FY05
FY06
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
FY16
E
FY17
E
FY18
E
FY19
E
FY20
E5,000
25,000
45,000
65,000
85,000
105,0005,
591
6,49
3 11,2
80 13,0
72
15,6
44
9,70
9 17,5
28
19,4
45
17,4
04
18,8
36
22,3
86 27,9
57
24,8
04
30627.6255124484
37623.7355945365
46008.6383193143
56035.6202720106
35111.2808942167
49227.1376352234
68470.593509792
94598.3146847448
Average Average Plus
23% CAGR
40% CAGR
39% CAGR
6% CAGR
Trailing PEAverage: 17.5xAverage Plus: 19.2xHigh:25.2x
STRATEGY | March 2016 35
Applied to Nifty, results are similarCorporate Profit to GDP (%) Scenarios of Nifty EPS
Scenarios of Indian Markets - Nifty
FY04
FY05
FY06
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
FY16
E
FY17
E
FY18
E
FY19
E
FY20
E
4.7
5.4
6.2
7.3 7.8
5.5
6.56.2
4.94.6
4.34.0
3.9
4.29508747428241
4.69017494856481
5.08526242284723
5.480349897129634.559402935
52705
5.21880587105411
5.87820880658116
6.6
Corp Profit to GDP (%) Average Average Plus
Corporate Profit to GDPAverage: 5.5%Average Plus: 6.6%High:7.8%
FY04
FY05
FY06
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
FY16
E
FY17
E
FY18
E
FY19
E
FY20
E
131
169
184
236 28
1
251
247
315 34
7
365 401
410
394
494.746364689856
615.796137790467
761.024444783918
934.826132158222539.4377608
66318
722.877324826633
953.231881330336
1241.17427396312
Nifty EPS (INR) Average Average Plus
24% CAGR
33% CAGR
FY04
FY05
FY06
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
FY16
E
FY17
E
FY18
E
FY19
E
FY20
E
1,77
2
2,03
6
3,40
3
3,82
2
4,73
5
3,02
1
5,24
9
5,83
4
5,29
6
5,68
3
6,70
4
8,49
1
7,53
9
9624.41389241722
11596.7698101675
13859.0821737487
16443.60666726711121.0160761
716
14874.0857895898
19576.0550041399
25440.0930852341
Average Average Plus
22% CAGR
36% CAGR
37% CAGR
6% CAGR
STRATEGY | March 2016 36
Applied to Nifty, results are similarCorporate PAT Margin (%) Scenarios of Nifty EPS
Scenarios of Indian Markets - Nifty
FY04
FY05
FY06
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
FY16
E
FY17
E
FY18
E
FY19
E
FY20
E
16.3
16.3
16.417.2
16.1
14.3
14.8 14.6
13.1
12.511.9
11.6
11.0
11.8275494722137
12.655281871205
13.4830142701962
14.3107466691875
12.0399278889956
13.0800387047689
14.1201495205422
15.1602603363154
Corporate PAT Margin (%)
Corporate PAT MarginAverage: 14.3%Average Plus: 15.7%High:17.2%
FY04
FY05
FY06
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
FY16
E
FY17
E
FY18
E
FY19
E
FY20
E
131
169
184
236 28
1
251
247
315 34
7
365 401
410
394
494.256211197613
616.785455715358
766.397774222523
948.712174077838
546.675160083288
752.605721810956
1029.55799143864
1400.78411858517
Nifty EPS (INR) Average Average Plus
25% CAGR
37% CAGR
FY04
FY05
FY06
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
FY16
E
FY17
E
FY18
E
FY19
E
FY20
E
1,77
2
2,03
6
3,40
3
3,82
2
4,73
5
3,02
1
5,24
9
5,83
4
5,29
6
5,68
3
6,70
4
8,49
1
7,53
9
9614.87882472022
11615.4008010749
13956.9363422273
16687.862367483911270.221858
3407
15485.7839463107
21143.5268428355
28711.583148865
Average Average Plus
22% CAGR
40% CAGR
37% CAGR6% CAGR
STRATEGY | March 2016
Indian Markets: Up 100x in 30 years
37
STRATEGY | March 2016 March 2016
Indian Equities – Time-In or Timing?Thank You
STRATEGY | March 2016 39
DISCLOSUREMotilal Oswal Securities Ltd. (MOSL) Member of NSE, BSE & MSEI - CIN no.: U65990MH1994PLC079418Registered Office Address: Motilal Oswal Tower, Rahimtullah Sayani Road, Opposite Parel ST Depot, Prabhadevi, Mumbai-400025; Tel No.: 022-3980 4263; www.motilaloswal.com. Correspondence Address: Palm Spring Centre, 2nd Floor, Palm Court Complex, New Link Road, Malad (West), Mumbai- 400 064. Tel No: 022 3080 1000. Registration Nos.: NSE (Cash): INB231041238; NSE (F&O): INF231041238; NSE (CD): INE231041238; BSE (Cash): INB011041257; BSE (F&O): INF011041257; BSE (CD); MSEI (Cash): INB261041231; MSEI (F&O): INF261041231; MSEI (CD): INE261041231; CDSL: IN-DP-16-2015; NSDL: IN-DP-NSDL-152-2000; Research Analyst: INH000000412. AMFI: ARN 17397. Motilal Oswal Asset Management Company Ltd. (MOAMC): PMS (Registration No.: INP000000670); PMS & Mutual Funds are offered through MOAMC which is group company of MOSL. Motilal Oswal Wealth Management Ltd. (MOWML): PMS (Registration No.: INP000004409) is offered through MOWML which is a group company of MOSL. Motilal Oswal Securities Ltd is a distributor of Mutual Fund & IPOs. Please read the Risk Disclosure Document prescribed by the Stock Exchanges carefully before investing. Investment in Securities is subject to market risk and there is no assurance or guarantee of the returns. Details of Compliance Officer: Name: Neeraj Agarwal, Email ID: [email protected] , Contact No.:022-30801085
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