Market Overview

Monthly Insight Performance

Stock Picks
Valuation at a Glance
Q3FY16 Report Card
Sector Outlook: Consumer Durables
Economy Review
Mutual Fund Overview
Technical View
Market Diary
Commodity Monthly Round-Up
World Economic Event Calender

NTPC Ltd. | Marico Ltd.

MARCH 2016

Inside this issue

01

14

Market
Overview

Q3FY16
Report Card

38

Technical
View

04

Monthly
Insight
Performance

23

Sector
Outlook

44

Market Diary

08

12

Stock Picks
NTPC Ltd.
Marico Ltd.

28
45

Economy
Review

Commodity
Monthly
Round up

37
48

Valuation at a
Glance

Mutual Fund
Overview

World
Economic
Event Calender

Name

Designation

Email ID

Contact No.

Paras Bothra

VP Equity Research

paras@ashikagroup.com

+91 22 6611 1704

Krishna Kumar Agarwal

Equity Research Analyst

krishna.a@ashikagroup.com

+91 33 4036 0646

Partha Mazumder

Equity Research Analyst

partha.m@ashikagroup.com

+91 33 4036 0647

Tirthankar Das

Technical & Derivative Analyst

tirthankar.d@ashikagroup.com

+91 33 4036 0645

SEBI Registration No. INH000000206

Disclosure
The Research Analysts and /or Ashika Stock Broking
Limited do hereby certify that all the views expressed in
this research report accurately reflect their views about
the subject issuer(s) or securities. Moreover, they also
certify the followings: The Research Analyst or Ashika Stock Broking Limited or
his/its Associates or his/its relative, has any financial
interest in the subject company (ies) covered in this report.
No
The Research Analyst or Ashika Stock Broking Limited or
his/its Associates or his/its relative, have actual/beneficial
ownership of 1% or more in the subject company, at the
end of the month immediately preceding the date of the
publication of the research report. No

The Research Analyst or Ashika Stock Broking Limited

or his/its Associates or his/its relatives has any material
conflict of interest at the time of publication of the
research report. No
The Research Analyst or Ashika Stock Broking Limited
or his/its Associates have received any compensation or
compensation for investment banking or merchant
banking or brokerage services or for product other than
for investment banking or merchant banking or brokerage
services from the companies covered in this report in the
past 12 months. No
The Research Analyst or Ashika Stock Broking Limited
or his/its Associates have managed or co managed in the
previous 12 months any private or public offering of
securities for the company (ies) covered in this report. No

The Research Analyst or Ashika Stock Broking Limited

or his/its Associates have received any compensation or
other benefits from the company (ies) covered in this
report or any third party in connection with the Research
Report. No
The Research Analyst has served as an officer, director
or employee of the company (ies) covered in the research
report. No
The Research Analyst or Ashika Stock Broking Limited
has been engaged in Market making activity of the
company (ies) covered in the research report. No

Disclaimer
This report is for the personal information of the authorized recipient and does not construe to be any investment, legal or taxation advice to you. Ashika Stock Broking Ltd. is
not soliciting any action based upon it. This report is not for public distribution and has been furnished to you solely for your information and should not be reproduced or
redistributed to any other person in any form. The report is based upon information that we consider reliable, but we do not represent that it is accurate or complete, and it
should not be relied upon such. Ashika Stock Broking Ltd. or any of its affiliates or employees shall not be in anyway responsible for any loss or damage that may arise to any
person from any inadvertent error in the information contained in this report. Ashika Stock Broking Ltd., or any of its affiliates or employees do not provide, at any time, any
express or implied warranty of any kind, regarding any matter pertaining to this report, including without limitation the implied warranties of merchantability, fitness for a
particular purpose, and non-infringement. The recipients of this report should rely on their own investigations.

BUDGET 2016-17

Budget 2016-17 presented by our honorable finance

and completed in three years. MAT to apply. Deduction for

minster Mr Arun Jaitely is a well thought out budget

additional interest of Rs. 50,000 per annum for loans up to

document where an attempt has been made to make it an

Rs. 35 lakh sanctioned in 2016-17 for first time home

all inclusive budget. The focus of the budget has been

buyers, where house cost does not exceed Rs 50 lakh.

clearly to boost the rural economy, targeted public

Other relief measures for small tax payers have been of Rs

investments in roads and railways and maintaining fiscal

6600/- i.e., an Increase in the limit of deduction of rent

prudence. It can well be said in the words of finance

paid under section 80GG from Rs. 24000 per annum to Rs.

minster expressing in some its forum post the budget is

60000, to provide relief to those who live in rented houses

that the Budget 2016-17 reflects the realty of India. It

and also the raising of the ceiling of tax rebate under

address the agriculture sector, emphasizes the rural India,

section 87A from Rs. 2000 to Rs. 5000 to lessen tax

social and physical infrastructure commitments for the

burden on individuals with income upto Rs 5 lacs.

people of India and also a combination of various other

factors including the housing sector.
If we look at the totality of things major key takeaways as

Other important is with the Service tax where there has

been no tinkering and hence is also indicative of the fact
that the government is in no hurry to raise it to a level so

far as the spending allocation is considered is for

as to comply with the upcoming GST (indicating that GST is

Infrastructure at Rs 2,21,246 crore of which road and

not likely to come up as easily as was anticipated earlier).

railways almost covers up the larger share in the pie.

Other important untouched area where the market feared

Allocation for social sector including education and health

was with the tinkering of the Long-term capital gain tax

care is at Rs 1,51,581 crore and allocation for rural sector

which was left untouched.

at Rs 87,765 crore and allocation for agriculture and

farmers welfare is Rs 35,984 crore. Other part on which
government tried to focus on is the simplification and
rationalization of taxes and certainty in taxation. One
important measure in the taxation front is that domestic
taxpayers can declare undisclosed income or such income
represented in the form of any asset by paying tax at 30%,
and surcharge at 7.5% and penalty at 7.5%, which is a
total of 45% of the undisclosed income. Declarants will
have immunity from prosecution. This is an important step
to curb black money and one needs to look at the

The negatives have been that the Dividend Distribution Tax

and the STT have been hiked. Also EPF and PF have been
aligned with the superannuation fund. In case of
superannuation funds and recognized provident funds,
including EPF, the same norm of 40% of corpus to be tax
free will apply in respect of corpus created out of
contributions made on or from 1.4.2016. This EPF and PF
taxation is a negative for the middle income salaried
people and who are hit by such measures.
For the Corporate tax it has maintained the same as 30%

measures and its effectiveness. Other measures have been

and there are certain tweaking with regard to newly set up

on new dispute resolution scheme and other schemes of

manufacturing companies and start-up companies which

penalty and interest and its waiver and also the

are as follows:

retrospective tax issues. This is important to address tax

New manufacturing companies incorporated on or after

litigations in a timebound manner.

1.3.2016 to be given an option to be taxed at 25% +

One more important issue is the governments focus and

surcharge and cess provided they do not claim profit

thrust on the affordable housing sector. 100% deduction

linked or investment linked deductions and do not avail

for profits to an undertaking in housing project for flats

of investment allowance and accelerated depreciation.

upto 30 sq. metres in four metro cities and 60 sq. metres

in other cities, approved during June 2016 to March 2019

Lower the corporate tax rate for the next financial year
for relatively small enterprises i.e companies with

MARCH 2016
MARKET OVERVIEW

turnover not exceeding Rs 5 crore (in the financial year

the Bankruptcy code and amendments in the SARFESI Act

ending March 2015), to 29% plus surcharge and cess.

and consolidation of the PSU banks and asset quality

100% deduction of profits for 3 out of 5 years for

startups setup during April, 2016 to March, 2019. MAT
will apply in such cases.

For the fiscal part, they have done a commendable job and

review are the measures to be taken by the government to

address the grave concern of defaults. There is also couple
of financial sector reforms which government has
introduced to address issues pertaining to the above
mentioned problems and also to introduce certain

also the net borrowing figure of Rs 4.25 lac crore and the

derivative products in the commodity derivative market.

gross borrowing at Rs 6 lac crores is way below what the

But one key disappointment was with the bank

market was anticipating and hence the bond market rallied.

recapitalization amount of Rs 25,000 crores which was less

The calculation to it also looks realistic. So in a sense it

than what the market was anticipating.

looks that the fiscal road map by the government has been
laid quite smartly and now its the monetary policy which
have the room to maneuver and put the stress off of the
corporate India and the banks by really cutting rates and
not to get too much rattled with the inflation number at a
time when the whole world is reeling under deflationary
tendencies. And also if we look at the quarterly corporate
topline numbers its reflective of the fact that the demand
environment is fragile and flagging and so the pricing
power remains feeble and thereby also the risk to upside
inflation is tamed. In such a scenario the antidote is left
w i t h t h e R B I i s t o c u t ra t e s a n d co m p l i m e n t t h e
commendable fiscal prudence shown by the government
and hence relieve the corporate and banks of vicious
repercussions of the struggling banking bad assets and
ailing corporate defaulting. For the fiscal discipline part the
government has laid out some key initiatives like the
strategic disinvestment and the listing of the general
insurance companies which are profitable. Strengthening of

Now as we are done with the budget which is more tilted

towards rural India and its income growth, agri India, social
sector & physical infrastructure and this have a larger
benefit in terms of addressing to the larger section of the
society at large and also laying ground for the future image
makeover with upcoming state elections. A fine balance has
been made along with the focused infrastructure push and
other social schemes. Strengthening certain regulations and
introducing financial reforms and maintaining fiscal
prudence despite of OROP and 7th Pay commission
liabilities, are the key takeways and a complete budget
package from the government and market participants now
will start looking at markets beyond budget in couple of
days. Focus on growth was not the prime or the big agenda
in the overall scheme of things and incentivizing large
corporate was not the priority except for the startup
companies and the new manufacturing set-ups.

BUDGET 2016-17

Budget Estimates for 2016-2017:

Particulars (Rs. Crores.)
Revenue Receipts

2014-15
Actuals

2015-16
Budget
Estimates

2015-16
Revised
Estimates

2016-17
Budget
Estimates

1101472

1141575

1206084

1377022

Tax Revenue (net to centre)

903615

919842

947508

1054101

Non-Tax Revenue

197857

221733

258576

322921

Capital Receipts (5+6+7)$

562201

635902

579307

601038

Recoveries of Loans

13738

10753

18905

10634

Other Receipts

37737

69500

25312

56500

Borrowings and other

liabilities *

510725

555649

535090

533904

Total Receipts (1+4)$

1663673

1777477

1785391

1978060

Non-Plan Expenditure

1201029

1312200

1308194

1428050

10

On Revenue Account of which

1109394

1206027

1212669

1327408

11

Interest Payments

402444

456145

442620

492670

12

On Capital Account

91635

106173

95525

100642

Plan Expenditure

462644

465277

477197

550010

14

On Revenue Account

357597

330020

335004

403628

15

On Capital Account

105047

135257

142193

146382

Total Expenditure (9+13)

1663673

1777477

1785391

1978060

17

Revenue Expenditure (10+14)

1466992

1536047

1547673

1731037

18

Of Which, Grants for creation

of Capital Assets

130760

132472

132004

166840

19

Capital Expenditure (12+15)

196681

241430

237718

247023

365519

394472

341589

354015

(2.9)

(2.8)

(2.5)

(2.3)

Effective Revenue Deficit (20-18)

234759

268000

209585

187175

(1.9)

(2.0)

(1.5)

(1.2)

Fiscal Deficit {16-(1+5+6)}

510725

555649

535090

533904

(4.1)

(3.9)

(3.9)

(3.5)

108281

99504

92469

41234

(0.9)

(0.7)

(0.7)

(0.3)

Revenue Deficit (17-1)

Primary Deficit (22-11)

*http://indiabudget.nic.in/glance.asp
Notes:

GDP for BE 2016-2017 has been projected at Rs. 15065010 crore assuming 11% growth over the Advance Estimates of 2015-2016
(Rs. 13567192 crore) released by CSO.

Individual items in this document may not sum up to the totals due to rounding off.

Paras Bothra
Vice President - Equity Research
Email - paras@ashikagroup.com
Phone : 022 6611 1704

MARCH 2016
MONTHLY INSIGHT PERFORMANCE

Over the years, Ashika Research based on its rigorous and

Wellness, Bharti InfraTel, Indusind Bank, Deccan Cements,

continuous analysis on fundamental basis, has

Cummins India, Adani Ports, L&T, Prism Cement, MRF Ltd.,

recommended stocks and consistently achieved the target

Dr Reddy, Berger Paints, Godrej Consumer, Divis Lab,

price recommended. Since January 2012 we have

Tatamotor - DVR, BPCL, Gulshan Polyols, Pidilite, Pidilite

recommended 186 stocks out of which 144 has achieved

Ind., IFB Industries, Motherson Sumi, Escorts, Castrol India,

target. Hit Ratio stands at 78%. Out of these 79 stocks

Rallis India, Info Edge (India), LIC Housing Fin, AIA

have given a return of more than 100%. During this period

Engineering, Finolex Ind., Ashok Leyland, Zee

the Nifty has given a return of 37% and a return of 75%

Entertainment, Indian Bank, Berger Paints India, Dr. Reddy

from its peak.

Lab, Tech M, Axis Bank, FDC Ltd., Dabur India, Multibase

The stocks recommended by us such as Cera Sanitaryware,

India, Tata Motors, V-Guard Ind., IPCA Lab, Magma Fincorp

Symphony, Srikalahasti Pipes, Aurobindo Pharma, Shree

and City Union Bank have generated exceptional returns

cement, MRF, Britannia, Torrent Pharma, Wim Plast,

(more than 100% returns) for our investors. A few of them

Axiscades Engg, Lupin, Pidilite Ind, Can Fin Homes, Maruti

have generated returns in excess 200% for our investors.

Suzuki, Glenmark Pharma, Kaveri Seeds, Himatsingka Seide,

We have selected stocks across large cap and mid cap

HPCL, Gujarat Gas, Relaxo Footwears, Zensar Tech,

companies and across variety of sectors. For the period

Hexaware Ltd., Havels India, PI Industries, Dabur, UPL,

analyzed, the stocks recommended by us have

Sharda Motor, VA Tech Wabag, Emami, Bajaj Finserv, Zydus

Success Rate

Return Classification

25%

18%

46
Stocks

4%

78%

12%

79
Stocks

23
Stocks

43%
38
Stocks

20%

Target Achieved
Total Call: 186

Exit/Booked

Calls Open

More than 100% Return

100-50% Return

50-25% Return

Less than 25% Return

BUDGET 2016-17

Recommended Stocks
01/03/2016)
Feb-16

Jan-16

Dec-15

Nov-15

Oct-15

Sep-15
Aug-15

Jul-15

Jun-15
May-15

Apr-15

Mar-15

Feb-15

Jan-15

Dec-14

Nov-14

Diwali
Pick

HDFC
HCL Tech
Hero MotoCorp
Pidilite Ind.
Indraprastha Gas
SH Kelkar
Texmaco Rail
Wabco India
Sanofi India
Garware Wall Ropes
Inox Wind
Sterlite Tech
GP Petroleums
HCC
Castrol India
Zee Ent.
Syngene Int
Berger India
Ceat
Cummins India
Greenply Ind.
TIME Technoplast
SQS India BFSI
Asian Paints
Idea Cellular
Gruh Finance
Maruti Suzuki
Whirlpool India
Sun pharma
Tata Motors
Ultratech
Tata Global
Abbott India
Strides Arcolab
Elantas Beck India
MCX
BEML
Rolta
SML Isuzu
HBL Power
Mangalam Cement
Amrutanjan Health
Torrent Pharm
Emami
Dewan Housing
KPIT Tech
Bajaj Corp
Alstom India
Transport Corp
Multibase India
Albert David
ONGC
Cadila Helthcare
Karur Vysys
JK Lakshmi Cement
Ashok Leyland
Karur Vysys
SKS Microfinance
NOCIL

Banking & Finance

IT
Auto
Paints & Chemical
Oil & Gas
Personal Prod.
Engg. & Const.
Auto
Pharma
Textiles
Power
Electrical Equip.
Oil & Gas
Construction
Oil & Gas
Media
Pharma
Paints & Chemical
Tyre
Electrical Equip.
Plywood
Plastic Prod.
IT
Paints & Chemical
Telecom
Banking & Finance
Auto
Home Appl.
Pharma
Auto
Cement
FMCG
Pharma
Pharma
Chemical
Finance
Electrical Equip.
IT
Auto
Battery
Cement
Pharma
Pharma
FMCG
Finance
IT
Personal Prod.
Electrical Equip.
Transportation
Rubber Prod.
Pharma
Oil & Gas
Pharma
Banks
Cement
Auto
Banks
Finance
Chemical

1180
866
2562
551
525
250
151
6280
4300
388
397
94
67
26
433
390
321
208
1080
962
935
66
680
760
179
261
3774
760
925
515
2680
141
4020
1153
1130
1177
978
191
979
34.9
321
449
1096
783
397
200
327
586
284
164
256
395
1384
541
348
44
540
317
43

1400
1020
2820
656
624
310
183
7200
5060
488
500
130
156
43
510
464
385
247
1245
1130
1123
81
863
883
209
322
4367
879
1220
615
3300
174
4680
1340
1320
1552
1200
250
1222
55
432
650
1338
924
480
263
385
725
354
300
363
516
1600
700
396
65
700
412
60

18.60%
17.80%
10.10%
19.10%
18.90%
24.00%
21.20%
14.60%
17.70%
25.80%
25.90%
38.30%
132.80%
65.40%
17.80%
19.00%
19.90%
18.80%
15.30%
17.50%
20.10%
22.70%
26.90%
16.20%
16.80%
23.40%
15.70%
15.70%
31.90%
19.40%
23.10%
23.40%
16.40%
16.20%
16.80%
31.90%
22.70%
30.90%
24.80%
57.60%
34.60%
44.80%
22.10%
18.00%
20.90%
31.50%
17.70%
23.70%
24.60%
82.90%
41.80%
30.60%
15.60%
29.40%
13.80%
46.20%
29.60%
30.00%
38.40%

1194
877
2728.8
648
608
275.8
154.9
6450
4525
436.5
411.4
108.6
90.2
28.3
474.4
439.4
436
283.7
1319.9
1247.7
210
69.9
1291
926.8
186.5
279
4790
847
1010
531
3369
150.5
6177.7
1414
1605
1289.9
1612
196.8
1671
64.5
324.5
564.9
1718.4
1365
569.2
232.4
522
877
348.5
342.5
404.3
412.5
2160
619
429.9
99.7
619
589.6
64.5

1.20%
1.30%
6.50%
17.60%
15.80%
10.30%
2.50%
2.70%
5.20%
12.50%
3.60%
15.50%
34.60%
8.80%
9.50%
12.70%
35.80%
36.40%
22.20%
29.70%
-77.50%
5.90%
89.90%
21.90%
4.20%
6.90%
26.90%
11.40%
9.20%
3.10%
25.70%
6.70%
53.70%
22.60%
42.00%
9.60%
64.80%
3.00%
70.70%
84.80%
1.10%
25.80%
56.80%
74.30%
43.40%
16.20%
59.60%
49.70%
22.70%
108.80%
57.90%
4.40%
56.10%
14.40%
23.50%
124.20%
14.60%
86.00%
48.80%

1060.3
813.3
2499.9
586.7
508.4
236.4
99
5299.5
4317.8
278.9
218.8
73.5
45
17.7
367.4
372.4
395.5
224.3
947.8
809.3
163.3
44.7
770.5
846.1
104.3
228
3236.5
597.6
853.9
299.7
2768.6
103.6
4786.2
879.6
1178.3
813.7
945.5
68.8
667.1
29.6
171.5
378.2
1261
983.9
153.6
133.8
381.7
562
226
179.9
247.2
194.1
314.6
398.3
269
87.7
398.3
483.2
38.9

Target Achieved
Target Achieved
Target Achieved
Target Achieved

Target Achieved
Target Achieved

Target Achieved

Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Exit
Target Achieved
Target Achieved
Exit
Target Achieved
Target Achieved
Target Achieved
Exit
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved

MARCH 2016
MONTHLY INSIGHT PERFORMANCE

01/03/2016)
Oct-14

Sep-14

Aug-14

Jul-14

Jun-14

May-14

Apr-14

Mar-14

Feb-14

Jan-14

Dec-13

Nov-13

Oct-13

Sep-13

Aug-13

Kesoram Industries
Akzo Nobel
IFB Industries
Munjal Auto
Tata Motors
Timken India
KEC International
Indoco Remedies
Ingersoll-Rand
Bodal Chemicals
Som Distilleries
Sharda Motor
Axiscades Engg
Visaka Industries
Deccan Cements
Gulshan Polyols
Mahindra Lifespace
V-Guard Ind.
Astra Microwaves
Himatsingka Seide
Mangalam Cement
Coal India
Container Corporation
Balmer Lawrie
Can Fin Homes
Srikalahasti Pipes
Bank of Baroda
AIA Engineering
MOIL Ltd.
Wim Plast
Engineers India
Gujarat Gas
City Union Bank
Relaxo Footwears
Motherson Sumi
PI Industries
VA Tech Wabag
Bharti InfraTel
UPL
Finolex Ind.
NIIT Tech
Zensar Tech
Bajaj Finserv
FDC Ltd.
MRF Ltd.
Info Edge (India)
Indian Bank
Symphony
Pidilite Ind.
Aurobindo Pharma
Kaveri Seeds
Speciality Restaurant
Britannia
Glenmark Pharma
Ultratech Cement
L&T
Tech M
Indusind Bank
Escorts
Hexaware Ltd.
Godrej Consumer
Torrent Pharma

Diversified
Paints & Chemical
Household Appl.
Auto Parts
Auto
Industrial Prod.
Electrical Equip.
Pharma
Industrial Prod.
Chemical
Breweries & Dist.
Auto Parts
IT
Cement Prod.
Cement
Chemical
Real Estate
Industrial Prod.
Defence
Textile
Cement
Coal
Logistics
Logistics
Housing Finance
Iron & Steel Prod.
Banking
Industrial Prod.
Metals & Mining
Plastic Prod.
Engg. & Const.
Gas
Banking
Footwear
Auto Ancillary
Agrichem
Water Treatment
Telecom - Infra
Fertilizer
Pipes
IT
IT
Banking
Pharma
Tyre
Web Services
Banking
Cons. Durable
Paints & Chemical
Pharma
Agri Prod.
Restaurants
FMCG
Pharma
Cement
Engg. & Const.
IT
Banking & Finance
Auto
IT
FMCG
Pharma

117
1240
295
102
527
447
102
256
649
60
211
391
106
119
270
177
560
593
142
74
221
392
1180
473
305
46
164.4
606
255
620
224
263
52.8
297
232
252
645
171
187
155
355
349
726
130
17350
446
101
405
266
216
305
124
759
520
1808
705
1375
344
82
107
815
421

176
1460
380
155
598
545
130
327
785
94
269
536
138
173
408
274
710
746
186
95
285
500
1500
700
450
70
201.6
726
341
800
270
305
69
390
285
315
765
213
251
185
500
500
850
170
19430
550
120
500
350
297
580
198
845
610
2045
810
1495
470
108
130
950
475

50.40%
17.70%
28.80%
52.00%
13.50%
21.90%
27.50%
27.70%
21.00%
56.70%
27.50%
37.10%
30.20%
45.40%
51.10%
54.80%
26.80%
25.80%
31.00%
28.40%
29.00%
27.60%
27.10%
48.00%
47.50%
52.20%
22.60%
19.80%
33.70%
29.00%
20.50%
16.00%
30.70%
31.30%
22.80%
25.00%
18.60%
24.60%
34.20%
19.40%
40.80%
43.30%
17.10%
30.80%
12.00%
23.30%
18.80%
23.50%
31.60%
37.50%
90.40%
59.70%
11.30%
17.30%
13.10%
14.90%
8.70%
36.60%
32.50%
21.50%
16.60%
12.80%

148.6
1551
700
134
612.4
669
164.8
412.2
1124.4
76.3
246
1190
396.2
188.8
772
430
664.4
1198
166.4
248.4
351
447.1
1947.7
682
1120
349
228.9
1364.2
341.7
2499
331.7
862.4
105.6
960.1
540.8
787.2
1945
499.7
576.4
347.7
631
1121
2160
274.4
46399
1015
224.3
3275
638
1535
1075.5
218.6
3434.2
1262.9
3398
1893.8
2995.1
989.3
188.2
335.8
1459
1718.4

27.00%
25.10%
137.30%
31.40%
16.20%
49.70%
61.60%
61.00%
73.30%
27.20%
16.60%
204.30%
273.80%
58.70%
185.90%
142.90%
18.60%
102.00%
17.20%
235.70%
58.80%
14.10%
65.10%
44.20%
267.20%
658.70%
39.20%
125.10%
34.00%
303.10%
48.10%
227.90%
99.90%
223.30%
133.10%
212.40%
201.60%
192.20%
208.20%
124.30%
77.70%
221.20%
197.50%
111.00%
167.40%
127.60%
122.00%
708.60%
139.80%
610.60%
253.10%
76.30%
352.50%
142.90%
87.90%
168.60%
117.80%
187.60%
130.90%
213.80%
79.00%
308.20%

85.1
1313
289
67.5
299.7
414.1
100.8
270.2
608.6
51.5
187.9
750
188
92.8
506.2
277.7
445.5
797.9
107.3
147.8
171.5
311
1158.4
497.2
943.8
197.3
131.9
807.1
190.1
1649.8
150.2
481.2
84.4
391.2
226.5
577.1
449.3
356.8
381.7
307.1
419.6
843
1611.9
180.1
32547.1
700.1
76.1
1968.5
586.7
655.7
351.7
83.2
2756.3
735.7
2768.6
1076
415.6
830
125.7
235
1188.4
1261

Exit
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Exit
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved

BUDGET 2016-17

01/03/2016)
Jul-13

Jun-13

May-13

Apr-13

Mar-13

Feb-13

Jan-13
Dec-12
Nov-12

Oct-12

Sep-12
Aug-12
Jul-12

Jun-12

May-12

Apr-12
Mar-12
Feb-12

Feb-12
Jan-12

TCS Ltd
Dabur India
Rallis India
Hero MotoCorp
Divis Lab
Corporation Bank
Maruti Suzuki
Dr. Reddy Lab
BPCL
Kotak Mahindra Bank
L&T
Pidilite
Godrej Consumer
ITC
Berger Paints
LIC Housing Fin
Zee Entertainment
Axis Bank
Tata Motors
Cairn India
Petronet LNG
Adani Ports
J & K Bank
Zee Entertainment
Indusind Bank
IPCA Lab
L&T Finance
Zydus Wellness
Sun TV
Allahabad Bank
Shoppers stop
Dish TV
Havels India
Lupin
Bajaj Finserv
Uflex
Cummins India
Exide Inds
Engineers India
Glenmark Pharma
Godrej Consumer
Cera Sanitaryware
HPCL
Emami
Berger Paints India
Graphite India
Rainbow papers
Tatamotor - DVR
Pidilite Ind
Magma Fincorp
Torrent Power
Castrol India
Prism Cement
MRF
Shoppers Stop
Allahabad Bank
Zydus Wellness
MRPL
Akzo Nobal
Maruti Suzuki
M&M
Tata Power
Dr Reddy
Shree cement
Dabur

IT
FMCG
Chemical
Auto
Pharma
Banking & Finance
Auto
Pharma
Oil & Gas
Banking & Finance
Engg. & Const.
Chemical
FMCG
FMCG
Chemical
Banking & Finance
Media & Ent.
Banking & Finance
Auto
Oil & Gas
Oil & Gas
Others
Banking & Finance
Media & Ent
Banking & Finance
Pharma
Banking & Finance
FMCG
Media & Ent.
Banking & Finance
Others
Media & Ent.
Cons. Durables
Pharma
Banking & Finance
Others
Engg. & Const.
Others
Engg. & Const.
Pharma
FMCG
Cons. Durables
Oil & Gas
FMCG
Chemical
Others
Others
Auto
Chemical
Banking & Finance
Power
Oil & Gas
Cement
Auto
Others
Banking & Finance
FMCG
Oil & Gas
Cons. Durables
Auto
Auto
Power
Pharma
Cement
FMCG

1460
150
130
1736
977
77
1673
1991
405
830
683
264
778
291
95
232
215
301
298
324
152
135
130.3
198
416
450
55
445
357
147
393
68
111
570
730
112
438
135
200
350
558
248
300
457
114
92
66
158
172
70
222
236
48.75
9767
340
200
382
71
857
1320
749
115
1642
2100
102

1640
170
148
2020
1120
92
1920
2280
460
1021
915
300
910
352
116
284
265
397.8
379
410
200
180
167
235
500
545
85
560
446
180
465
92
127.6
672
877
145
513
165
280
410
675
340
365
535
141
110
85
200
210
ACCu
290
ACCU
ACCU
ACCU
ACCU
ACCU
ACCU
ACCU
ACCU
ACCU
ACCU
120
1795
ACCU
125

12.30%
13.30%
13.80%
16.40%
14.60%
19.80%
14.80%
14.50%
13.60%
22.90%
34.00%
13.60%
17.00%
21.00%
21.60%
22.40%
23.30%
32.20%
27.20%
26.50%
31.60%
33.30%
28.20%
18.70%
20.20%
21.10%
54.50%
25.80%
24.90%
22.40%
18.30%
35.30%
15.00%
17.90%
20.10%
29.50%
17.10%
22.20%
40.00%
17.10%
21.00%
37.10%
21.70%
17.10%
23.70%
19.60%
28.80%
26.60%
22.10%
30.60%

4.30%
9.30%
22.50%

2839.7
94.50%
316.4 110.90%
298.7 129.70%
3270
88.40%
2484.7 154.30%
86
12.00%
4790 186.30%
4386.6 120.30%
987 143.70%
1475.3
77.70%
1893.8 177.30%
638 141.70%
1459
87.50%
410
40.90%
252.7 166.00%
524 125.80%
440.7 105.00%
654.9 117.60%
612.4 105.50%
386
19.10%
272.7
79.40%
374.8 177.60%
195.5
50.00%
440.7 122.60%
989.3 137.80%
906.9 101.50%
97.1
76.50%
1128.9 153.70%
494.9
38.60%
191.1
30.00%
624.4
58.90%
121.7
78.90%
346.9 212.50%
2129 273.50%
2160 195.90%
201.7
80.10%
1247.7 184.90%
205.2
52.00%
305
52.50%
1262.9 260.80%
1459 161.50%
2960.9 1093.90%
991 230.30%
1365 198.70%
252.7 121.70%
126.4
37.40%
94.4
43.00%
391.4 147.70%
638 270.90%
141 101.40%
252.9
13.90%
544 130.50%
133.5 173.70%
46399 375.10%
624.4
83.60%
211.3
5.70%
1128.9 195.50%
83.2
17.20%
1551
81.00%
4790 262.90%
1442.1
92.50%
117.6
2.20%
4386.6 167.10%
13360 536.20%
316.4 210.20%

2176.8
237.2
147.2
2499.9
950.6
32
3236.5
3036.3
769.3
630.4
1076
586.7
1188.4
295.7
224.3
421.9
372.4
375.8
299.7
118
235.1
196.7
63.4
372.4
830
564.8
51
645.6
320.7
43.4
342.8
67.8
272.2
1754.6
1611.9
133.6
809.3
127.9
150.2
735.7
1188.4
1698.4
688
983.9
224.3
66.1
29
234.1
586.7
85.4
227.8
367.4
61.9
32547.1
342.8
43.4
645.6
57.6
1313
3236.5
1228.1
57.3
3036.3
10003.7
237.2

Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Booked
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Booked
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Booked
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved

MARCH 2016
STOCK PICKS

NTPC Ltd.

CMP: Rs 126

BSE Code
NSE Code
Bloomberg Code
ISIN
Market Cap (Rs. Cr)
Outstanding shares(Cr)
52-wk Hi/Lo (Rs.)
Avg. daily volume (1yr. on NSE)
Face Value(Rs.)
Book Value

532555
NTPC
NTPC IN
INE733E01010
101295
824.5
164.75 / 107.1
4,890,277
10
99.6

50000

NTPC vs. Nifty

45000
100

40000
35000

90

30000
80

25000
20000

70

15000
10000

60

5000
Feb-16

Jan-16

Dec-15

Nov-15

Oct-15

Sep-15

Aug-15

Jul-15

Jun-15

Apr-15

May-15

0
Mar-15

50

Volume('000)RHS

NTPC

Nifty

Share holding pattern as on Dec 2015 (%)

Others
2.3

DII
13.2

Promoters
75.0

FII
9.6

Particulars (in Rs. Cr.)

Net Sales
Growth (%)
EBITDA
EBITDA Margin (%)
Net profit

Implementation of UDAY scheme

Ujwal DISCOM Assurance Yojana (UDAY) aims at permanent
resolution of DISCOM issues. The scheme focuses on
increasing DISCOM efficiency as against increasing tariff to
cover their losses. Under UDAY, State Electricity Boards
(SEBs) would be offered a multi-pronged solution. States
shall take over 75% of their debt as on September 2015,
while the interest rate for the balance 25% debt will be at
lower rates. This would improve the position of the DISCOM
and would thereby increase the demand for power by the
DISCOMs. Currently six states have enrolled to be part of
UDAY and performing as per operational milestones will be
given additional / priority funding through various schemes
under the power ministries. The UDAY scheme will also
focus on operational efficiencies, reduction in T&D losses
and quarterly increase in tariffs in a bid for permanent
resolution of SEB issues. NTPC is well placed to benefit
from such scheme.
Capacity additions to drive growth
NTPC is a long term growth play on the power sector with
its strong capacity addition plans. NTPC currently has a
generation capacity of nearly 45000 MW which is the
largest in India and is expected to add ~23,500MW
(~7,500MW by FY2017, ~8,050MW in FY2018 and
~8,200MW in FY2019) by FY2019. The company is
expecting that the capacity is set to increase by an average
~2GW per year during the next few years. The company has
earmarked a consolidated capex of ~31,500cr this fiscal.
With the strong capex plan, Management expects a 45%
jump in regulated equity by FY2018 and a 75% increase
by FY2019. With the incremental capacity coming on
stream and PLF likely to improve, the revenues and
earnings are likely to witness improvement going forward.
Demand revival in place

FY14

FY15

FY16E

FY17E

78950.6

80622.0

84895.0

93554.3

13.8

2.1

5.3

10.2

19698.7

17512.3

20035.2

22827.2

25.0

21.7

23.6

24.4

11403.6

9986.3

9423.3

10197.4

Net Profit Margin (%)

14.4

12.4

11.1

10.9

EPS (Rs)

13.8

12.1

11.4

12.4

Consensus Estimate: Bloomberg, Ashika Research

Target: Rs 148

Investment Rationale

Company Information

110

Rating: BUY

Power sector woes have mostly been related to fuel supply

issues and debt issues of State Electricity Boards (SEB). The
government is proactively taking steps to resolve both
these issues. With increasing production at Coal India, coal
availability issues have already been sorted to a large
extent. Rationalisation and swapping of coal sources are
alone expected to result in significant savings in freight
costs. Cabinet approval for gas pooling also raises
expectations of improved availability of gas. As per the
Power Ministry, NTPC is expected to save Rs. 8,570cr per

BUDGET 2016-17

annum through substitution of imported coal and freight

cost reduction through rationalization of coal sourcing. The
UDAY scheme can help the SEBs restructure their debt and
provide long term solutions for the SEBs via tariff hikes and
improvements in operating efficiencies and also allows the
SEBs to start signing new power purchase agreements
(PPA). Further it is also expected that demand to improve
going forward as the industrial cycle picks up. NTPC is best
placed within the power sector to benefit from any such
revival in power demand.
Economic action to improve
The economic activity has not picked up as expected which
has impacted the capex cycle and thereby the demand for
power. However as and when the revival in capex cycle
takes place, the demand for power is likely to increase
gradually thereby leading to higher generation.
Fuel link in place
NTPC has fuel supply agreements which would allow the
Company to operate majority of its existing capacity. It has
also been awarded coal mines which have ~5 bn tones of
reserves. While the existing capacity would be able to
operate at nearly 90% PLF with the existing fuel supply
agreement, the incremental capacity would be able to
operate at nearly 65% PLF levels. Owing to the linkages,
the Company is relatively better placed and largely
immune to fuel availability issues.
Result Analysis
NTPCs Q3FY16 result was below estimate. Net sales fell by
7% YoY to Rs. 173bn owing to 1% fall in sales volume and
6% fall in average realization. This is primarily on the back
of lower coal cost which fell by 13% to Rs 106bn. EBIDTA
stood at Rs. 45.3b, flat YoY as other operating expenses
increased 12% and lower core performance. A much
sharper fall in other income, down 52% to Rs. 2.4bn and
nil incentive income led to fall in adj. net profit to Rs
21.4bn. The management has indicated an adjusted profit
of Rs 20.7bn, down 10% YoY. NTPC has so far incurred Rs.
205bn as capex during 9MFY16 (79% at parent level, 21%
in group companies), thereby achieving 82% of target.
CERC case update
CERC regulations 2014-19 state coal GCV (gross calorific
value) should be measured at the point of wagon
unloading v/s post crushing. CERC in its latest order has
asked NTPC to measure GCV of coal on received basis
from the as fired basis for computation of GCV. Currently,
NTPC measures the GCV of coal at crushers inside the
power plant. Besides, NTPC currently doesnt have
arrangements to measure GCV at the unloading point as
the regulator directs it to. NTPC has opined that
measurement according to GCV would be time consuming
while demurrage would hurt on wagon waiting. Besides,

this will create uncertainty due to practical difficulties in

measuring coal quality from multiple wagons and sources
and may lead to under-recovery in fuel costs. NTPCs
appeal is pending with the Appellate and clarity on
earnings impact has not been mentioned. The company has
also changing its accounting or making any provisions.
Key Risks

Uncertainty on coal GCV to be measured at the place of

unloading or just before burning the coal

Lower supply of coal from Coal India and higher fuel

cost

Delay in improvement of economic and industrial

activities

Valuation
Despite the muted demand environment, NTPC, Indias
largest power producer with an operating capacity of 45
GW continues to remain high on capacity addition. The
company has ~23GW of projects under construction which
is expected to increase generation and drive earnings CAGR
going ahead. Amid a lack of private participation for new
projects, NTPC stands out and anticipates Rs 300bn of
capex in FY17. Although, the PSU major doesnt see
immediate redressal of problems in the power sector,
however the transfer of SEB debt to States under the UDAY
scheme is a long term positive for the sector in general.
The tripartite agreement between States, SEBs and NTPC
guaranteeing payment security is going to expire in 2016
and will be renewed for 10 years. So far, 11 states have
confirmed their participation. The company is comfortably
placed on PPA front with assured offtake and is also
relatively better placed with higher linkages for its pre2009 projects. This is in contrast to the IPPs who sell
power at distressed rates since they dont have PPAs, thus
hurting margins. NTPC on the other hand has witnessed
improvement in cost of generation following improving
domestic coal supply thus reducing its dependence on eauction and imported coal. With additional incentives to
run plants above 85% PLF, the operational metrics is
expected to improve going ahead. The company is now in
the able hands of Mr. Gurdeep Singh, ex-chairman of
Gujarat State Electricity Corporation. Under him NTPC is
expected to minimize systemic O&M inefficiencies, improve
fuel efficiencies and earn higher incentives (on higher PLF).
On valuation front, the company is trading at a significant
discount from historical valuation (P/E) of 15x. On price to
book value basis the company is trades at one year forward
P/B of 1.1x is at a 10 years historical low and the company
is also have a history of giving high divided to its investor
(Dividend Yield of 2.5% in FY15). Thus, we recommend our
investors to BUY the scrip with target price of Rs 148 from
12 - 18 months investment horizon. Currently, the scrip is
valued at P/E multiple of 10.3x of FY17E EPS.

MARCH 2016
STOCK PICKS

Marico Ltd.

CMP: Rs 236

Target: Rs 280

Investment Rationale

Company Information
BSE Code
NSE Code
Bloomberg Code
ISIN
Market Cap (Rs. Cr)
Outstanding shares(Cr)
52-wk Hi/Lo (Rs.)
Avg. daily volume (1yr. on NSE)
Face Value(Rs.)
Book Value

140

Rating: BUY

531642
MARICO
MRCO IN
INE196A01026
30545
129.0
246 / 176.1
1,112,489
1
14.1

25000

Marico vs. Nifty

130
20000

120
110

15000

100
90

Result Analysis
Marico Q3FY16 performance was impressive on all counts.
Consolidated revenues comes in at Rs 15.6bn, up 7.2% yoy
led by domestic volume growth in double digits at 10.5%
yoy and International business reported 8% CC growth.
The volume growth was bolstered by the strong growth in
the Saffola (17%) and Hair Oil portfolio (21%) this quarter.
EBIDTA comes in at Rs 2.9bn, up 24% yoy led by sharp
30% decline in copra prices and crude linked commodities
like LLP, HDPE etc. Gross margin was up 630bps yoy at
51.3% led by lower inputs and EBITDA margin at 18.9%,
up 260bps yoy is a bit lower due to higher A&P spend
which increased to 12.1% of sales, up 150bps yoy. With all
these profit of the company increased by 23.7% yoy to Rs
1.97 bn.

10000

80
70

5000

60

Marico registered 20% YoY growth in its sales, which the

company believes to be an early signs of improvement in
u r b a n m a r ke t s . T h e c o m p a n y m a i n t a i n s t h a t t h e
improvement will be steady going ahead, while rural
markets will take much longer to improve. The recent
i m p rove m e n t i n t h e e co n o m y l i ke O RO P , 7 t h Pa y
commission and implementation of GST should certainly
enhance the underlying growth in urban markets, thus the
outlook for urban markets remains quite positive for the
next couple of years which will help the company to have a
better revenue outlook in the future.

Volume('000)RHS

Feb-16

Jan-16

Dec-15

Nov-15

Oct-15

Sep-15

Aug-15

Jul-15

Jun-15

Apr-15

May-15

Mar-15

50

Marico

Nifty

Share holding pattern as on Dec 2015 (%)

Others
9.0
Promoters
59.7

DII
3.6

Structural changes to driving the next leg of growth

FII
27.8

Particulars (in Rs. Cr.)

Net Sales
Growth (%)
EBITDA
EBITDA Margin (%)
Net profit
Net Profit Margin (%)
EPS (Rs)

FY14

FY15

FY16E

FY17E

4686.5

5733.0

6203.1

2.0

22.3

8.2

12.3

747.7

870.1

1073.1

1246.9

6966.1

16.0

15.2

17.3

17.9

485.4

573.5

725.8

856.8

10.4

10.0

11.7

12.3

3.8

4.5

5.6

6.6

Consensus Estimate: Bloomberg, Ashika Research

10

Improvement in urban markets evident

Over the last two years, Marico has applied a number of

transformational changes in management and capital
structure. The company has shift the control from a
promoter who led the management team to more
professionalized personal, further the company changes its
incentive structure of the management team with a greater
focus on long-term growth drivers. Moreover on capital
structure the company is focused on deployment of fund
on organic growth and dividend payouts. Under the
technology initiative the company is now focusing on IT led

BUDGET 2016-17

distribution changes such as automated order system

which should further enhance Maricos trade. In future the
company is expected to focus more on other initiative in
order to improve its production and distribution system
thereby improving its revenue visibility.

Project ONE has helped improve direct coverage in top

six metros by 60% leading to incremental turnover of
Rs 650-750mn by FY16 end; to be extended to 14
more towns

A&P/sales to be in 11-12% band in the medium term;

significant part of A&P has been invested for new
products such as VAHO, foods and the youth portfolio
in India

Planned capex in FY16/17 is likely to be around Rs 11.25bn each year

As cash is accumulating despite paying reasonable

dividends company is on the lookout for acquisitions
that could be a strategic fit and at reasonable
valuations

Saffola strategic proposal to drive growth

Saffola recovered after 5 quarters of muted growth post
the strategic plan taken by the company to gain volumes
without resorting to aggressive price corrections or by
compromising the premium brand image it carries. Saffolas
recovery this quarter is due to uptrend in prices of other
base oils helping reduce price premium of Saffola and
regional offerings done by the company for key markets
l i ke M a h a ra s h t ra a n d a l s o t o o k s e l e c t i ve p r i c i n g
intervention to fight regional competition while delivering
on the consumer requirements. The other plan the
company took is broader participation through different
variants targeting a wider consumer base, like aggressively
marketing low priced brands like Active and Tasty without
compromising on the gross margin of each brand. The
company is planning to take more different strategies to
further boost the saffola volume growth.
Conference call key takeaways

Management is hopeful of a gradual pickup in urban

consumption though rural as of now remains soft.

The company expects volume growth of 8-10% with

paramount importance to market share gains; medium
term EBITDA margin target of 16-17%

Saffola growth was helped by regional pricing strategy,

broadening of consumer base, reduction in price
premium, and favourable base; it expects 10%+ growth
going forward

Apart from good growth aided by market share gains in

VAHO company sees new launches i.e. Parachute
Ayurvedic hair oil in non south markets and Nihar
Naturals Sarson Kesh Tel as key drivers

RM prices yoy are down substantially and are expected

to remain soft.

International business growth improved as growth

stabilized in the Middle East, South East Asia and
Egypt; Bangladesh is doing well after price corrections

Gel is doing well; company expects deodorants growth

to rise; serum affected by counterfeits

Key Risks

Spike in raw material prices

Worsening of rural demand

Competition in core brands

Valuation
Marico is the prominent player in the Indias FMCG market
with strong brand portfolio and leadership position in its
core brands. The company has delivered strong
performance in a challenging environment with double
digit volume growth and healthy margins. Strong volume
delivery with sharp double-digit volume growth in Saffola
and Value Added Hair Oils is a key positive from Q3FY16
results. As major part of companys revenue comes from
urban market (~65%), the urban market is expected to
further improve with the implementation of OROP, 7th Pay
commission and GST. The company has also made several
structural changes in the management and capital in order
to improve is production and distribution system thereby
improving its revenue visibility. Management of the
company is quite optimistic about the future of the
company with improvement in volume growth and margin.
The company is also looking for inorganic growth. The
stellar performance in Saffola and VAHO portfolio;
International operations is also on improvement mode. We
believe Marico is best placed amongst FMCG peers to
deliver strong volume and earnings growth. Thus, we
recommend our investors to BUY the scrip with target price
of Rs 280 from 12 - 18 months investment horizon.
Currently, the scrip is valued at P/E multiple of 26.8x of
FY18E EPS.

11

MARCH 2016
VALUATION AT A GLANCE

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47

12

ACC
Adani Ports
Ambuja Cements
Apollo Hospitals
Ashok Leyland
Asian Paints
Aurobindo Pharma
Axis Bank
Bajaj Auto
Bajaj Finserv
Bajaj Holdings
Bank of Baroda
Bank of India
Bharat Forge
Bharti Airtel
Bharti Infratel
BHEL
Bosch
BPCL
Britannia Industries
Cairn India
Canara Bank
Cipla
Coal India
Colgate-Palmolive
Container Corp.
Cummins India
Dabur India
Divis Lab.
Dr Reddys Lab.
Eicher Motors
Exide Industries
Federal Bank
GAIL
GlaxoSmith Consumer
Glaxosmithk Pharma.
Glenmark Pharma.
Godrej Consumer
Grasim Industries
HCL Technologies
HDFC
HDFC Bank
Hero MotoCorp
Hindalco Industries
Hindustan Unilever
HPCL
ICICI Bank

1209.0
201.7
190.0
1489.0
90.2
862.8
665.8
387.2
2260.0
1637.1
1385.0
134.7
85.1
760.7
317.9
367.7
91.5
16897.6
792.1
2781.6
118.1
162.4
515.9
314.9
825.4
1171.0
819.9
240.2
948.9
3019.8
19170.1
128.6
47.9
316.7
5472.1
3193.0
743.0
1227.9
3360.1
835.0
1052.3
978.6
2625.4
69.1
826.1
710.6
200.6

22698.4
41740.0
29509.3
20683.7
25684.0
82754.8
38943.1
92221.5
65301.5
26051.4
15413.6
31014.0
6901.3
17721.5
127057.4
69806.8
22383.3
53001.5
57326.1
33374.9
22104.6
8815.5
41474.2
198933.9
22438.8
22882.2
22708.2
42245.8
25173.1
51471.0
52258.1
10897.0
8227.9
40210.7
23004.4
27045.7
20936.1
41812.4
31359.9
117738.3
166335.0
247355.0
52399.0
14300.0
178692.5
24110.3
116519.2

23.4
16.5
23.9
54.6
30.1
45.3
19.1
11.2
17.2
13.3
N/A
N/A
N/A
23.2
23.4
29.9
39.2
N/A
8.8
39.6
11.7
N/A
22.9
13.3
N/A
25.5
N/A
33.7
23.5
20.1
41.0
16.2
N/A
16.1
N/A
56.4
24.5
36.7
13.8
15.5
19.1
21.6
16.8
29.1
42.6
8.4
9.0

16.2
14.7
17.7
43.7
18.8
37.9
15.5
9.3
15.5
11.0
N/A
N/A
N/A
19.3
21.1
25.6
10.7
N/A
8.5
32.8
11.3
N/A
19.1
12.1
N/A
22.5
N/A
29.1
19.6
19.7
31.5
14.9
N/A
11.5
N/A
43.9
14.9
31.0
10.7
13.6
15.7
17.5
14.9
10.4
37.2
7.2
8.2

2.7
3.9
N/A
6.5
5.7
17.5
7.5
2.0
5.9
2.3
1.2
0.7
0.2
5.1
2.0
4.1
0.7
N/A
2.5
26.8
0.4
0.2
3.8
4.9
29.1
3.0
7.9
12.6
7.2
5.2
15.1
2.8
1.1
1.2
N/A
14.8
6.7
9.7
1.3
4.4
N/A
3.9
8.0
0.4
44.4
1.7
1.4

7.1
23.7
N/A
11.1
3.2
31.8
35.4
17.9
28.5
16.4
16.0
9.8
6.4
24.9
8.7
11.4
4.3
N/A
22.9
67.4
7.7
9.1
11.3
33.2
N/A
14.7
N/A
35.5
26.4
24.7
31.6
16.8
14.5
9.5
N/A
N/A
15.9
22.4
7.8
29.1
N/A
19.9
38.9
2.2
115.4
10.7
15.2

14.1
19.4
12.8
12.6
N/A
34.5
30.3
18.6
30.5
18.0
N/A
N/A
N/A
21.0
8.5
16.0
5.0
N/A
22.7
49.7
3.0
N/A
16.1
37.5
N/A
11.8
N/A
32.0
27.8
17.9
36.4
16.0
N/A
9.7
N/A
33.9
27.4
24.2
11.5
26.9
22.2
17.1
N/A
3.7
108.4
19.3
14.9

34.0
1.1
5.0
5.8
0.5
6.1
2.3
4.6
50.0
1.8
32.5
3.2
5.0
7.5
2.2
11.0
1.2
N/A
22.5
16.0
9.0
10.5
2.0
20.7
12.0
13.4
14.0
2.0
10.0
20.0
50.0
2.2
1.1
6.0
55.0
N/A
2.0
5.5
18.0
18.0
15.0
8.0
60.0
1.0
15.0
24.5
5.0

54.9
9.8
52.1
25.7
95.6
41.9
8.3
17.7
57.3
1.6
17.8
21.8
16.5
22.8
17.1
104.5
19.5
N/A
33.8
27.9
37.7
18.9
13.6
95.3
58.4
24.8
49.4
33.0
31.2
14.6
22.0
30.4
17.8
24.1
39.6
N/A
11.4
20.6
9.5
32.6
27.0
18.8
50.7
24.2
74.4
55.4
23.7

2.8
0.5
N/A
0.4
0.5
0.7
0.3
1.2
2.2
0.1
2.3
2.4
5.9
1.0
N/A
3.0
1.3
N/A
2.8
0.6
7.6
6.5
0.4
6.6
1.5
1.1
1.7
0.8
1.1
0.7
0.3
1.7
2.3
1.9
N/A
N/A
0.3
0.4
0.5
N/A
N/A
0.8
2.3
1.4
1.8
3.4
2.5

BUDGET 2016-17

48

Idea Cellular

105.2

37894.9

12.3

20.2

1.5

14.4

7.1

0.6

6.8

49

Indiabulls Housing Fin.

596.1

25104.9

10.1

8.5

3.2

30.8

25.6

26.0

47.9

4.4

50

Indian Oil Corporation

376.6

91509.5

8.1

7.5

1.3

7.2

16.1

6.6

34.2

1.8

51

IndusInd Bank

52

Infosys

53

ITC

54

JSW Steel

55

Kotak Mahindra Bank

56

Larsen & Toubro

57

LIC Housing Finance

58

Lupin

59

M & M Financial

60

Mahindra & Mahindra

61

Marico

62

Maruti Suzuki

63

Motherson Sumi

64

MRF

N/A

860.8

51208.1

N/A

N/A

2.9

15.6

N/A

4.0

11.8

N/A

1116.5

256465.4

19.0

16.7

4.4

23.6

24.1

29.8

55.2

N/A

320.1

257505.6

25.4

22.5

8.1

32.8

30.5

6.3

51.8

2.0

1135.2

27435.5

149.9

15.0

1.2

8.1

8.0

11.0

15.1

1.0

633.3

116210.0

32.6

23.9

4.4

14.8

14.3

0.5

2.7

0.1

1112.0

103599.1

23.7

19.1

2.5

12.1

11.5

16.3

31.7

1.5

436.2

22018.4

13.4

10.3

2.8

18.0

N/A

5.0

18.1

1.1

1762.5

79435.7

35.8

24.6

8.9

30.4

26.6

7.5

14.0

0.4

209.1

11890.0

16.9

11.9

2.0

16.2

14.2

4.0

24.9

1.9

1233.0

76565.2

20.0

15.5

2.8

12.8

14.6

12.0

23.8

1.0

237.0

30570.6

41.9

34.4

16.8

36.0

34.0

1.3

28.1

0.5

3395.5

102737.4

21.5

17.0

4.2

16.6

21.1

25.0

19.8

0.7

229.9

30409.5

23.6

18.0

9.2

27.5

34.7

2.0

30.7

0.9

33048.9

14016.5

6.8

7.2

3.1

22.2

N/A

50.0

2.3

0.2
10.5

65

NMDC

81.2

32193.5

8.9

9.8

1.0

20.4

9.9

8.6

53.4

66

NTPC

121.1

99811.3

10.9

10.0

1.2

11.8

11.3

2.5

20.6

2.1

67

Oil India

303.6

18250.5

7.5

7.9

0.8

12.4

10.1

20.0

46.1

6.6

191.1

163666.5

9.1

8.7

0.9

10.4

9.7

9.5

44.3

5.0

3250.1

27573.7

21.7

18.1

8.0

19.5

30.8

665.0

471.9

20.5

68

ONGC

69

Oracle Financial Serv.

70

Petronet LNG

238.0

17846.3

N/A

N/A

3.1

16.5

N/A

2.0

17.0

0.8

71

Power Finance Corp.

154.6

20414.4

N/A

N/A

0.6

20.0

N/A

9.1

20.0

5.9

72

Power Grid Corp.

133.6

69815.6

11.3

9.6

1.8

13.8

15.9

2.0

22.2

1.5

73

Punjab National Bank

72.9

14314.6

N/A

N/A

N/A

N/A

N/A

3.3

18.0

N/A

74

Reliance Capital

327.9

8271.2

7.7

7.7

0.6

7.8

7.2

9.0

22.7

2.7

75

Reliance Comm.

52.1

12992.5

16.4

16.3

N/A

N/A

2.3

N/A

N/A

N/A

76

Reliance Industries

981.0

318028.2

11.5

10.7

1.3

11.3

11.3

10.0

12.5

1.0

77

Reliance Infrastructure

421.6

11090.3

6.2

5.1

0.4

6.7

7.4

8.0

11.7

1.9

78

Rural Electrification

157.4

15557.4

N/A

N/A

0.6

23.3

N/A

10.7

19.8

6.8

79

Shriram Transport Fin.

827.5

18776.8

14.2

11.4

2.0

11.6

15.0

10.0

22.1

1.2

1009.2

35943.2

47.3

37.6

7.0

N/A

16.6

6.0

30.1

0.6

161.4

125291.2

8.6

7.2

0.7

9.1

9.3

3.5

15.6

N/A

80

Siemens

81

State Bank of India

82

Steel Authority of India

83

Sun Pharma.

84

Sundaram Finance

85

Tata Chemicals

35.6

14682.5

N/A

N/A

0.3

4.9

-2.0

2.0

38.3

5.6

863.4

207815.8

38.2

25.9

7.0

20.6

23.6

3.0

15.9

0.3

1239.8

13774.1

21.8

18.2

3.7

16.9

16.6

10.5

20.3

0.8

324.8

8282.1

11.1

9.0

1.5

10.7

15.0

10.0

53.4

3.1

86

TCS

2244.2

441967.0

18.3

16.6

6.5

35.1

34.4

39.0

77.9

1.8

87

Tata Global

107.1

6765.7

17.5

15.0

1.2

4.4

7.4

2.3

57.3

2.1

88

Tata Motors

308.0

101187.8

8.9

6.8

1.8

23.0

18.4

0.0

0.0

0.0

89

Tata Power

58.6

15849.1

14.5

11.5

1.2

0.4

9.2

1.3

783.1

2.2

90

Tata Steel

250.0

24290.1

N/A

28.8

N/A

N/A

2.0

8.0

N/A

N/A

91

Tech Mahindra

432.2

41802.5

13.5

11.8

2.8

20.1

21.1

6.0

21.9

N/A

92

Titan Company

93

UltraTech Cement

94

United Breweries

95

United Spirits

96

UPL

97

Vedanta

326.5

29026.2

36.5

29.0

9.4

29.1

25.8

2.3

25.0

0.7

2824.5

77510.8

32.9

23.8

4.1

11.6

14.1

9.0

11.8

0.3

807.9

21361.3

65.3

50.5

11.5

14.8

17.9

1.0

10.3

0.1

2646.3

38462.4

93.5

56.7

58.3

-91.4

38.8

0.0

N/A

0.0

394.9

16921.3

13.4

11.1

2.9

20.6

20.0

5.0

18.7

1.3

71.6

21242.0

12.7

9.5

0.4

-24.7

4.1

4.1

N/A

5.7
N/A

98

Wipro

536.7

132547.5

14.6

13.5

2.9

20.9

20.1

12.0

34.0

99

Yes Bank

707.5

29752.8

N/A

N/A

2.5

21.3

N/A

9.0

18.8

1.3

387.9

37255.8

37.2

29.4

10.6

26.6

21.6

2.3

26.0

0.6

100 Zee Entertainment

#N/A: Not Available

Source: Bloomberg Consensus as on Feb. 29, 2016

13

MARCH 2016
Q3FY16 Report

Q3FY16
Report Card
The corporate earnings performance continue to scare and

and OMCs surprised strongly on PAT front while Bank of

it seems like we are still to reach the bottom and rebound.

Baroda, Tata Steel and BHEL were major draggers. Excluding

The global timid demand environment has obviously added

Oil & Gas and financials, Adjusted PAT for Nifty was slightly

to the cause, however on the domestic front also we are

better compared to previous two quarters with a decline of

yet to see a meaningful recovery. Revenue declined by 2%

~1% YoY. The turmoil in the Global markets led by China

yoy in Q3FY16 for Nifty companies highlighting the

had a severe impact on the performance of the companies

sustained weak demand conditions while lower commodity

directly or indirectly particularly in the commodity and the

prices helped to better EBITDA margins by ~80 bps to 19%

capital goods space. Domestic demand and capacity

while profits continued to see decline of ~14% yoy. Among

utilization still needs to pick up meaningfully while the

sectors, Metals, Telecommunications and Agri input &

GDP growth for Q3 remains stable at 7.5%. IIP for Q3FY16

chemicals were the major drags while Auto ancilliaries,

however declined to 1.73% as against 4.73% in the

Construction & Infra, Retail and Pharma performed

previous quarter and 2.03% in the same quarter last year.

relatively stronger. In the Nifty space, Tata Power, Hindalco

The RBI has maintained status quo on the interest rates

CNX 500 (Excluding Banks, NBFC & Oil Companies)

(In Rs. Cr.)

Q3FY14

Q4F14

Q1F15

Q2F15

Q3F15

Q4F15

Q1F16

Q2F16

Q3F16

Net Sales

658076

711826

681904

698515

723156

747692

718106

768194

788676

Growth (YoY)

12%

12%

13%

10%

10%

5%

5%

10%

9%

Growth (QoQ)

4%

8%

-4%

2%

4%

3%

-4%

7%

3%
650276

536342

591441

552368

572320

600053

623808

581888

634128

Growth (YoY)

Operating Expenses

10%

12%

11%

10%

12%

5%

5%

11%

8%

Growth (QoQ)

3%

10%

-7%

4%

5%

4%

-7%

9%

3%

% of Sales

82%

83%

81%

82%

83%

83%

81%

83%

82%

121734

120385

129536

126195

123103

123883

136218

134067

138401

Growth (YoY)

20%

10%

23%

10%

1%

3%

5%

6%

12%

Growth (QoQ)

6%

-1%

8%

-3%

-2%

1%

10%

-2%

3%

18%

17%

19%

18%

17%

17%

19%

17%

18%

Operating Profit

OPM
Depreciation

30683

32457

32936

33458

34694

34681

35459

37060

38177

Growth (YoY)

15%

16%

16%

12%

13%

7%

8%

11%

10%

Growth (QoQ)

3%

6%

1%

2%

4%

0%

2%

5%

3%

25889

27629

27400

29016

29227

31746

32469

32951

31388

Interest
Growth (YoY)

20%

24%

10%

10%

13%

15%

18%

14%

7%

Growth (QoQ)

-2%

7%

-1%

6%

1%

9%

2%

1%

-5%

Other Income

16123

21052

19693

19851

18112

19573

21760

18882

19491

Growth (YoY)

25%

-13%

24%

18%

-7%

10%

-5%

8%

-18%

Growth (QoQ)

37%

-6%

1%

-9%

8%

11%

-13%

3%

-17%

61287

59808

63864

57252

53000

55439

60467

60223

60649

Growth (YoY)

Adj Profit

23%

0%

40%

10%

-14%

-7%

-5%

5%

14%

Growth (QoQ)

18%

-2%

7%

-10%

-7%

5%

9%

0%

1%

9%

8%

9%

8%

7%

7%

8%

8%

8%

NPM
Source: Capitaline

Note: Due to some exceptional income or loss, we have not taken Vedanta, Tata Steel, S A I L, B H E L, Alok Inds., JSW Steel in our calculation.

14

BUDGET 2016-17

since the rates were lowered by 50 bps in September 2015

directive) coupled with subdued operating performance

and was frontloaded. However, the lower interest rates still

(interest income reversals on NPAs, base rate cut effect on

need to be reflected through the G-Sec yields. India CPI

margins) contributed to extreme pressure on bottom line.

inflation although under the target range for RBI, but has
been slowly creeping up since its lowest mark of 3.69% in
July 2015, largely on account of higher food inflation
following deficient monsoon. While India continues to
report deflation at the whole sale price level and is a major
challenge for the Govt to report lower nominal GDP growth
at ~8-8.5% vs 11-11.5% forecasted. However, higher
indirect taxes in the face of lower direct taxes following
weak corporate performance and savings from the decline
in crude oil prices are still the saving grace for the
government. The government has started to loosen the
purse and step up the plan expenditure when the
corporate are unwilling to commit to capex. All in all, there

PSBs' provisioning for bad loans totalled Rs 43,717 crore in

the December 2015 quarter - a figure that has doubled
from the year-ago levels. And, this figure is eight times the
provisions made by private-sector peers, even as PSBs'
share of advances (industry market share) is three times
that of private peers. The overall asset quality for the
industry itself weakened in the December 2015 quarter as
the total gross non-performing assets (NPAs) recognized
stood at Rs 4,37,860 crore, up 50 per cent y-o-y (each for
public and private sector banks). PSBs accounted for 90 per
cent of the total gross NPAs in the quarter. Average gross
NPA ratio for PSB stands at 7.32 % about three times more
than private banks which stands at 2.74 %.

have been green shoots with revival of demand in the auto

industry while Cement, Pharma, Power companies enjoy

Private banks reported robust NII growth of 21.6 % YoY

the benefit of lower raw materials while metal & mining

while the figure has declined by about two per cent for

and capital goods are still to witness any meaningful

PSBs. Decline was steep in case of Bank of Baroda, UCO

recovery and infrastructure remains at the mercy of

Bank, Dena Bank, and Allahabad Bank. The new

government.

methodology to calculate base lending rate effective from

April 2016 could further dent the NIIs.

In 2015 FIIs were net buyers of Rs. 17,806 cr in the equity

segment. For the month of January 2016, FIIs were net

The RBI's asset quality review (AQR) resulted in recognitions

seller of Rs. 11,126 cr and during Q3FY16 they were the

of significant amount of stressed cases as NPAs of which

net seller of Rs. 3,241 cr while DIIs were the net buyers of

~50% is taken in Q3FY2016 and remaining will be spread

Rs. 67,587 cr in 2015. For the month of January 2016, DIIs

over Q4FY2016. BOB decided to take the full impact in Q3

were net buyers of Rs. 12,874 cr and during Q3FY16 they

itself resulting in elevated slippages. The retail focused

were the net buyers of Rs. 13,309 cr.

banks (HDFC Bank, IndusInd Bank) reported a stable asset

quality performance whereas corporate focused banks
(ICICI Bank, Axis Bank) witnessed NPA pressures.

Sectoral performance review

Banking Sector
The quarter gone by was tough on most banks, but public
sector banks' (PSBs) performance was worse than their
private peers, especially in terms of asset quality and top
line growth, leading to a dismal show on the profit front. A
sharp rise in provisions (due to recognition of stressed
loans as NPAs, in line with the Reserve Bank of India [RBI]'s

Given the RBI's thrust on early clean-up of banks' balance

sheets coupled with continued sluggishness in key sectors
of economy (viz infra, steel, textiles etc) the asset quality of
banks may remain under pressure in the next few quarters.
Hence, going forward, with credit growth stabilizing at 11
per cent despite weak corporate demand, capital infusion
appears critical for PSBs to combat the provisioning
pressures and see any significant improvement in credit

15

MARCH 2016
Q3FY16 Report

BSE Bankex & Bank Nifty

Company (Rs. Cr.)
St Bk of India
HDFC Bank

NII

YoY

QoQ

Net Profit

YoY

QoQ

13606

-1%

7069

24%

NIM
(%)

GNPA
(%)

NNPA
(%)

CAR
(%)

RoA (A)
(%)

-5%

1115

-62%

-71%

2.9

5.1

2.9

12.5

0.2

6%

3357

20%

17%

4.3

1.0

0.3

15.9

2.0

ICICI Bank

5453

13%

4%

3018

4%

0%

3.5

4.7

2.3

15.8

1.8

Axis Bank

4162

16%

2%

2175

15%

14%

3.8

1.7

0.8

13.9

1.8

Punjab Natl.Bank

4120

-3%

-5%

51

-93%

-92%

2.8

8.5

5.9

11.3

0.0

Bank of India

2708

-3%

-10%

-1506

-968%

34%

2.0

9.2

5.3

11.3

-0.9

Bank of Baroda

2705

-18%

-17%

-3342

-1101%

-2785%

1.7

9.7

5.7

12.2

-1.9

Canara Bank

2227

-6%

-16%

85

-87%

-84%

2.2

5.8

3.9

11.5

0.1

Union Bank (I)

1997

-6%

-5%

79

-74%

-88%

2.2

7.1

4.1

10.3

0.1

Kotak Mah. Bank

1766

67%

5%

635

37%

11%

4.3

2.3

1.0

15.2

1.4

IndusInd Bank

1173

36%

7%

581

30%

4%

3.9

0.8

0.3

16.4

1.9

Yes Bank

1157

27%

4%

676

25%

11%

3.4

0.7

0.2

14.9

1.8

605

3%

-1%

163

-39%

1%

3.0

3.2

1.7

14.3

0.8

48748

6%

-3%

7087

-51%

-51%

Federal Bank
Total
Source: Capitaline

Auto & Auto ancillary

Auto sector came out with decent performance in the
December quarter driven by volume growth amid festival
season. Subdued demand from rural markets due to two
consecutive sub-normal monsoons capped the volume
growth, while lower commodity prices aided operating
margins growth. M&HCVs recorded good growth due to
highest correlation to the macro improvement while LCV
segment showed signs of revival. In PVs, good growth was
seen due to improvement in consumer sentiment; however

segment and a 14.2% growth in the domestic scooter

segment. The light commercial vehicle (LCV) volumes in the
domestic market registered a growth of 4.2% after 10
consecutive quarters of a decline. The motorcycle volumes
in the domestic market were muted, up by 0.6%, while the
three-wheeler volumes were up 8.1% for the quarter
ending December 2015. The weakness in the rural demand
and concern around exports continue to affect the
motorcycle volumes.
The urban demand is likely to remain strong driven by

pressure was witnessed in 2W sales. Tractor sales continue

lower fuel prices, moderation in interest rate and improving

to be under pressure due to stress in rural economy. PVs

economy. Further faster reforms and clearance of various

posted strong volumes led by new launches. MHCV growth

long pending projects could lead to higher employment

too remains robust due to high replacement demand and

and provide additional boost to auto demand outlook. The

the improving health of transport agencies due to low fuel

key impact of economic recovery could be more visible in

prices. The festive season helped 2Ws clock mid-single-

M&HCV & CVs followed by passenger vehicles, three-

digit growth in Q3 backed by strong double-digit growth in

wheelers and two-wheeler. In commercial vehicle (CV)

scooter volumes, though the momentum is flagging. We

segment volume would be driven by medium and heavy

expect 2W volumes to show double-digit growth from

commercial vehicle segment in FY16 and FY17. PVs are

H2FY16. The benefit of commodity price correction was

likely to be driven by executive & midsize car segment on

seen in most of the auto and auto ancillary companies,

the back of new launches in FY16 and FY17. Due to flurry

which witnessed a gross margin expansion. Prices of key

of launches lined up in utility vehicles segment in 2016, it

inputs like rubber & steel have resulting into lower raw

is expected that sales to remain strong in future.

material cost and higher margin. On the volume front, the

growth in the domestic medium and heavy commercial
vehicle (MHCV) segment was strong at 22.4% followed by
a 14.6% growth in the domestic passenger vehicle (PV)

16

Tata Motors profitability was impacted due to JLR adverse

market and product mix reflecting in realizations decline
and EBITDA margins decline. Maruti Suzuki posted below
expected numbers despite of strong volume growth but

BUDGET 2016-17

profitability run down due to higher discounts, transitory

MotoCorp's Revenue came in slightly better than estimate

impact of inventory run-down and higher fixed costs. M&M

as blended realisation surprised positively, and better than

posted in line result, as the company is showing

expected operating margin. Both higher realisations and

improvement in volume growth in both UV and tractor

lower input costs helped operating margins to expand.

although margins were better than expected due to lower

Bajaj Auto, and TVS Motor's EBITDA margin also expanded

raw material prices and inventory gains. Ashok Leyland

Yo Y d u e t o l owe r raw m a t e r i a l p r i ce s a n d h i g h e r

showed below expected performance due to lower defence

realizations.

kits and spares sales. In two wheeler segment, Hero

BSE Auto & CNX Auto

Company (Rs Cr)

Net
Sales

YoY
%

QoQ
%

Operating
Profit

YoY
%

QoQ
%

OPM
%

Net
Profit

YoY
%

QoQ
%

NPM
%

Tata Motors

72256

3%

18%

9126

-8%

116%

13%

3508

-2%

916%

5%

Maruti Suzuki

15082

20%

8%

2170

34%

-4%

14%

1019

27%

-17%

7%

M&M

11008

17%

19%

1242

25%

21%

11%

808

-14%

-13%

7%

Motherson Sumi

9860

8%

7%

945

14%

6%

10%

307

21%

7%

3%

Hero Motocorp

7295

7%

7%

1140

39%

5%

16%

796

37%

3%

11%

Bajaj Auto

5565

-2%

-9%

1171

-5%

-11%

21%

901

5%

-3%

16%

Ashok Leyland

4085

22%

-17%

423

76%

-3%

10%

199

519%

-31%

5%

Eicher Motors

3317

45%

6%

517

71%

5%

16%

271

76%

6%

8%

MRF

3261

-3%

-2%

738

18%

-5%

23%

388

20%

-16%

12%

Apollo Tyres

2943

-5%

-2%

506

23%

5%

17%

279

51%

0%

9%

TVS Motor Co.

2940

11%

2%

197

23%

-7%

7%

108

19%

-7%

4%

Bosch

2698

13%

3%

347

74%

-23%

13%

221

99%

-28%

8%

Exide Inds.

1525

-2%

-12%

234

30%

-9%

15%

134

38%

-14%

9%

Amara Raja Batt.

1225

16%

6%

229

32%

15%

19%

136

33%

11%

11%

Cummins India

1147

6%

-4%

171

-9%

-15%

15%

178

-1%

-10%

16%

1052

-12%

-6%

313

-14%

-3%

30%

166

-15%

-5%

16%

145258

7%

10%

19469

7%

33%

13%

9419

11%

55%

6%

Bharat Forge
Total
Source: Capitaline

Metal & Mining

Continuing the trend from the previous quarter, Q3FY16
earnings performance of metals and mining companies
remained weak, on account of decline in global metal
prices. Weak demand scenario, renewed concerns about
global slowdown coupled with rising imports from China,
South Korea and Japan continued to put pressure on the
revenues. Base metals hit multi-year lows on the London
Metal Exchange (LME) due to heightening risk of a demand
slowdown from China. In ferrous metals, cheaper imports of
steel from China, Russia and FTA countries made the
situation worse. In case of nonferrous metals, fragile
demand, strength in USD Index and region specific issues
weighed on prices and premiums as well. Average INR/USD
depreciated further to 65.9 in Q3FY16.

Over the past month, the steel sector has been upbeat with
positive news flows with the MIP levied on steel imports
w.e.f. 5 Feb'16, and now it is expected that domestic steel
prices to get delinked from global movements. Other
positive news flows are from China and European Union
with China's finished steel exports for Dec'15-Jan'16
remaining flat versus successive increases, China
a n n o u n c i n g a 1 3 % c a p a c i t y c u t ove r 2 0 2 0 , Yu a n
appreciation, and EU levy of an antidumping duty on CR
steel from China and Russia. However, market expects that
any rally in steel stocks would hinge upon a sharp demand
recovery or extension of the MIP levy to beyond a year.
Prices of aluminum and zinc have remained stable since
January.
Ferrous companies underperformed due to poor volumes

17

MARCH 2016
Q3FY16 Report

and substantial fall in realizations on account of weak

Tata Steel Europe's EBITDA loss extended to US$31/ tonne.

demand and sharp rise in cheaper imports. Non-ferrous

JSW Steel's domestic performance was weak but better

segment on the other hand reported in line performance as

than expectations with EBITDA/ tonne of Rs 3443. In the

higher volumes helped contain lower LMEs to a large

mining space, NMDC reported weak performance due to

extent. Among the metal & mining space Coal India's

drop in iron ore prices. MOIL continued to disappoint due

performance was superior on cost optimizations and

to sharp drop in realizations and volume both. In Non-

operating leverage. In Ferrous segment, in Q3FY16 Steel

ferrous sector segment Hindalco posted better than

majors SAIL, Tata Steel and JSW Steel revenues were

expected performance. Adj. EBITDA/ tonne for Novelis

adversely impacted by steep fall in steel prices on account

stood in line with estimates. Consolidated results of

of slowdown in Chinese consumption, huge surge in

Vedanta was lower than expectations due to weakness in

imports of low priced steel and subdued domestic demand.

Cairn India, while Hindustan Zinc performance was broadly

SAIL's losses widened with EBITDA/ tonne loss of Rs 4764.

in line

BSE Metal & CNX Metal

Company (Rs Cr)

Net
Sales

YoY
%

QoQ
%

Operating
Profit

YoY
%

QoQ
%

OPM
%

Net
Profit

YoY
%

QoQ
%

-2127 -1454%

NPM
%

Tata Steel

28039

-17%

-4%

64

-98%

101%

0%

-239%

-8%

Coal India

19599

7%

12%

4820

20%

60%

25%

3718

14%

46%

19%

Vedanta

14877

-23%

-10%

3106

-49%

-22%

21%

18

-99%

-98%

0%

SAIL

8939

-20%

-3%

-1381

-215%

-31%

-15%

-1529

-364%

-45%

-17%

JSW Steel

8698

-34%

-20%

-1230

-154%

-171%

-14%

-923

-381%

-890%

-11%

Hindalco Inds.

8150

-5%

-9%

672

-27%

11%

8%

40

-89%

-61%

0%

Jindal Steel

4362

-14%

-8%

550

237%

0%

13%

-573

65%

7%

-13%

Hind.Zinc

3431

-11%

-15%

1478

-29%

-32%

43%

1811

-24%

-21%

53%

Bhushan Steel

2538

3%

-20%

362

-19%

-36%

14%

-697

-53%

5%

-27%

Welspun Corp

2032

-10%

-19%

239

12%

-22%

12%

87

397%

-14%

4%

Natl. Aluminium

1635

-14%

-10%

136

-74%

-60%

8%

133

-62%

-41%

8%

NMDC

1517

-49%

-5%

642

-67%

-28%

42%

655

-59%

-19%

43%

Jindal Saw

1077

-39%

-20%

154

-22%

-10%

14%

39

-37%

-61%

4%

NM

NM

-9

10%

5%

NM

-40%

-13%

NM

104895

-16%

-6%

9602

-58%

63%

9%

656

-92%

-90%

1%

Orissa Minerals
Total

Information Technology
The IT sector came out with a muted performance during
the December quarter of FY16. Seasonal weakness was
reflected in weak revenue growth across the sector. Despite

low teens. The sector is seeing a fundamental shift towards

digital and SMAC. Q3FY16 has seen some improvement in
spending environment in the developed markets.
For Q3FY16, top five IT companies have shown a mixed

favorable Rupee during the quarter, revenues saw only

trend in earnings performance with Infosys continued to

modest increase driven mostly by volume growth while net

beat earnings estimates once again with positive surprises,

profits remained muted because of cross currency

while HCL Technologies (HCL Tech) has led the pack with

headwinds and pressure on billing rates especially in the

better than expected result. Tata Consultancy Services (TCS)

traditional services. Revenue growth was supported by

and Wipro have lagged behind the estimates. Tier-I IT

growth in key verticals of BFSI, retail and healthcare.

service Companies reported a USD revenue growth of 1.1%

However, the slowdown in the energy vertical put

QoQ in Q3FY16. Changing the pecking order, Wipro led the

downward pressure on the revenues. While among the

pack with 3.1% sequential growth, followed by HCL Tech;

geographies revenue growth from US continues to be in

2.4%, Infosys 1.7%, Tech Mahindra 1.3% and TCS lag at

18

BUDGET 2016-17

0.7% Q-o-Q growth. Growth of most of the companies is

FY16 to 12.8-13.2% from 10-12% earlier led by strong

volume driven. Margins across the top-5 remained under

volume growth and indicated to achieve the industry

pressure during the quarter amid continued pressure on

leading growth in FY17. TCS and Wipro look optimistic on

billing rates and cross currency headwinds despite of INR

growth prospects in FY17 on account of higher spending in

depreciation. Revenue surprise was the maximum at

digital transformation. The softness in BFSI and weakness in

Persistent System among Tier-II IT, which grew 9.1% QoQ.

energy space could restrict revenue growth. However

Growth was also robust at eClerx Services 4.8% QoQ,

Nasscom has guided for 10-12% CC growth for FY17, and

Mindtree 3.9% QoQ and Tata Elxsi 4% QoQ.

also has estimated 1.5x growth in the digital space for

The managements of most of the companies expect

Q4FY16 to be better than Q3FY16, given a low base of
Q3FY16 and absence of effect of Chennai flood. Notably,
Infosys has increased its constant-currency guidance for

FY17. Overall it is expected that growth should pick up in

the coming years with higher incremental spending in the
digital space coupled with stabilisation in growth
deceleration in insurance and energy space.

BSE IT & CNX IT

Company (Rs Cr)

Net
Sales

YoY
%

QoQ
%

Operating
Profit

YoY
%

QoQ
%

OPM
%

Net
Profit

YoY
%

QoQ
%

NPM
%

TCS

27364

12%

1%

7715

9%

-1%

28%

6083

14%

0%

22%

Infosys

15902

15%

2%

3959

7%

-1%

25%

3465

7%

2%

22%

Wipro

12952

7%

3%

2764

0%

-1%

21%

2234

2%

0%

17%

HCL Technologies

10341

11%

2%

2226

-4%

6%

22%

1920

0%

11%

19%

Tech Mahindra

6701

17%

1%

1136

-3%

3%

17%

759

-6%

-3%

11%

MphasiS

1517

8%

-3%

217

7%

-5%

14%

174

7%

-6%

11%

Mindtree

1215

33%

4%

215

15%

-1%

18%

151

7%

-5%

12%

Oracle Fin.Serv.

1020

9%

2%

403

18%

-8%

40%

289

16%

-10%

28%
12%

Hexaware Tech.

820

15%

0%

130

8%

-11%

16%

99

14%

-11%

KPIT Tech.

813

4%

0%

118

9%

4%

15%

73

12%

-2%

9%

Cyient

782

10%

1%

110

-5%

-7%

14%

87

-14%

-12%

11%

Zensar Tech.

762

6%

0%

114

8%

-4%

15%

72

3%

-22%

9%

NIIT Tech.

679

14%

0%

122

42%

3%

18%

74

54%

9%

11%

Persistent Sys

592

20%

9%

108

9%

7%

18%

77

4%

8%

13%

eClerx Services

344

43%

5%

125

54%

2%

36%

89

46%

-4%

26%

Tata Elxsi

274

24%

4%

66

32%

8%

24%

40

44%

5%

15%

Info Edg.(India)

173

19%

0%

27

-24%

-19%

16%

22

-44%

-36%

13%

Just Dial
Total

171

11%

0%

37

-25%

-6%

22%

27

-16%

-42%

16%

82421

12%

2%

19593

5%

0%

24%

15736

7%

1%

19%

Source: Capitaline

FMCG Sector
Consumer companies continued to be hit by sluggish
demand, as the rural market remained in slowdown mode
in Q3 while the urban market recovers at a very slow pace.
Revenue grew moderately but there was an improvement
as compared to the first two quarters, led by the low base
effect and a favourable shift in festive season. During
Q3FY16, most of the FMCG companies under registered a
single-digit revenue growth with volume growth sustaining
on a sequential basis. The price cuts undertaken to pass on
the benefits of lower commodity prices to consumers
affected the overall revenue growth of many companies.
Premiumisation trend continued in urban markets as most

companies either launched premium products or cut prices

to increase consumer acquisition rate in premium products.
Britannia Industries, Marico and Berger are the only
exception, which clocked double-digit revenue growth
during the quarter on the back of redefined strategies and
adequate promotional activities while other companies like,
Asian Paints, GCPL and HUL registered a volume growth of
7-9%. Weak volumes growth of below 5% was reported by
Nestle (negative), GSK, Colgate, JFL, Dabur and Emami.
The benign input prices continued to aid FMCG companies
to post better operating profit margins in the absence of
double-digit revenue growth. The operating profit margins
of most of the FMCG companies improved in the range of

19

MARCH 2016
Q3FY16 Report

100-300 bps in Q3FY16 as average raw material to sales

ratio declined by 400-600 bps and were partially deployed
in higher advertisement and promotion expenses to tackle
increasing competition. The companies like Britannia,
Godrej Consumer, Dabur, P&G, Marico, GSK Consumer and
Jyothy Laboratories have consistently registered strong
double digit growth in PAT. ITC's operating performance was
affected by sluggish performance by the core cigarette
business, while Hindustan Unilever's PAT growth was
affected by lower revenue growth and lower other income.
Consumer goods companies continued to gain benefits
from lower raw material prices, which aided to post strong
double-digit earnings growth for the past few quarters. The
f a c t o r s , s u c h a s i m p l e m e n t a t i o n o f S eve n t h Pa y

Commission and softening of inflation will play a major role

in driving urban consumption in the coming quarters.
ITC result was below estimate due to lower cigarette
volume. Hindustan Unilever's result was inline with
estimates with mid single digit volume growth. Britannia's
performance was inline with estimates with biscuits volume
growth in double digits. GCPL reported the strongest set of
numbers better than expected, with 9% YoY volume
growth overall. Dabur's result was inline with estimates
with mid single digit volume growth but key surprise was
lower AD spending. Jyothy Labs consolidated net sales was
inline with estimates, led by volume growth but tax rate
increase was a bit dragger in net profit. P&G also came up
with strong set of numbers.

BSE FMCG & CNX FMCG

Company (Rs Cr)

Net
Sales

YoY
%

QoQ
%

Operating
Profit

YoY
%

QoQ
%

OPM
%

Net
Profit

YoY
%

QoQ
%

NPM
%

ITC

9177

3%

3%

3605

4%

1%

39%

2653

1%

9%

29%

Hind. Unilever

7981

3%

0%

1314

0%

1%

16%

971

-22%

1%

12%

United Spirits

2651

22%

24%

227

-3%

-14%

9%

41

-45%

-96%

2%

Godrej Inds.

2431

6%

-25%

137

29%

-43%

6%

139

53%

3%

6%
14%

Godrej Consumer

2356

5%

5%

457

15%

15%

19%

323

23%

12%

Britannia Inds.

2240

10%

1%

312

50%

-4%

14%

208

51%

-5%

9%

Dabur India

2127

2%

1%

378

7%

-7%

18%

319

13%

-7%

15%

Tata Global

2081

-3%

2%

162

-19%

13%

8%

59

-30%

-24%

3%

Nestle India

1959

-23%

12%

329

-40%

35%

17%

183

-44%

47%

9%
13%

Marico

1556

7%

5%

294

24%

30%

19%

198

24%

31%

United Breweries

1158

16%

2%

183

51%

22%

16%

72

81%

50%

6%

GlaxoSmith C H L

1029

2%

-9%

160

51%

-33%

16%

132

37%

-40%

13%

Colgate-Palm.

16%

1015

2%

-2%

231

19%

-9%

23%

159

22%

2%

Hatsun AgroProd.

831

17%

-3%

71

30%

-15%

9%

18

36%

-43%

2%

Emami

789

14%

37%

250

18%

64%

32%

134

-27%

119%

17%
21%

P & G Hygiene

714

11%

19%

216

68%

123%

30%

147

62%

110%

KRBL

704

-8%

-22%

108

-17%

-8%

15%

66

-20%

-16%

9%

Jubilant Food.

634

14%

8%

76

4%

19%

12%

32

-9%

33%

5%

Godfrey Phillips

534

0%

-8%

35

-15%

-58%

7%

14

29%

-72%

3%

Gillette India

508

2%

6%

77

16%

51%

15%

52

41%

56%

10%

Jyothy Lab.

385

7%

-4%

51

40%

4%

13%

39

47%

1%

10%

Advanta

384

-21%

25%

72

3%

112%

19%

61

139%

36%

16%

Bajaj Corp
Total

213

4%

2%

56

18%

6%

26%

50

19%

6%

23%

43458

3%

1%

8801

5%

3%

20%

6068

-1%

-7%

14%

Pharma Sector
In December Quarter, Pharma companies came out with a
decent performance. Overall sector sales and EBITDA margin
were in line with the estimates. Approval of key products,
less competition due to niche and complex product
launches, a better product mix and cost-control measures
helped profitability to grow in Q3FY16. During the quarter,

20

the US business of a majority of pharmaceutical players

reported a double-digit growth on account of new product
approvals with low competition. On the other hand, the
revenues of the businesses in the other emerging markets
were affected due to currency headwinds. The domestic
growth was in line with the industry growth during the
quarter. Emerging markets growth for large caps was hit by

BUDGET 2016-17

currency crisis and registered lower than expected growth.

India formulations sales witnessed a strong quarter for most
of the large cap companies as sales for acute products were
high this quarter. Overall, Q3FY16 was largely in line with
estimates. The outperformers for the quarter were Sun
pharma, Lupin, Aurobindo, Alkem, Alembic pharma and
Torrent while underperformers for the quarter were GSK
pharma, Cipla, Biocon and IPCA.
Sun Pharmaceuticals' numbers were above estimates led by
Taro. Domestic business maintained its leadership, while US
sales were impacted primarily due to competitive pressure
on some products and temporary supply constraints arising
from remediation efforts at the Halol facility. Dr. Reddy's

numbers were in line with estimates driven by healthy

performance in NAG, Europe and India, while partially offset
by Emerging markets, which were impacted by unfavorable
macroeconomic conditions while PAT was impacted on the
back of Rs. 637 mn exceptional forex loss in Venezuela.
Cipla reported much below estimates number due to one off
cost during the quarter, impacted overall profitability and
distribution policy changes in domestic market. Aurobindo
Pharma's result was in line with the estimates led by growth
in formulations business. Lupin's numbers were much better
on the back of price hikes taken in key products and
seasonality factor in the US.

Pharma Sector
Company (Rs Cr)
Sun Pharma.Inds.
Dr Reddys Labs
Lupin
Aurobindo Pharma
Cipla
Cadila Health.
Piramal Enterp.
Glenmark Pharma.
Torrent Pharma.
Strides Shasun
Apollo Hospitals
Wockhardt
Fortis Health.
Alembic Pharma
Divis Lab.
Biocon
Glaxosmit Pharma
Ipca Labs.
Abbott India
Sanofi India
Pfizer
Ajanta Pharma
Natco Pharma
Total

Net
Sales

YoY
%

QoQ
%

Operating
Profit

YoY
%

QoQ
%

OPM
%

Net
Profit

YoY
%

QoQ
%

NPM
%

7082
3968
3556
3496
3107
2428
1859
1756
1539
1515
1381
1076
1041
922
853
836
736
684
667
569
506
473
276
34895

2%
3%
12%
10%
12%
10%
33%
3%
32%
375%
17%
-22%
2%
80%
7%
9%
13%
-8%
16%
11%
7%
16%
41%
11%

4%
-1%
7%
5%
-10%
-1%
20%
-6%
-9%
309%
1%
-13%
-5%
-9%
-12%
0%
5%
-9%
3%
-3%
-1%
8%
18%
0%

2169
746
877
823
454
578
613
370
613
194
157
76
14
385
322
189
106
88
102
113
82
163
61
8673

0%
8%
-1%
34%
-18%
28%
91%
39%
155%
302%
-2%
-84%
-59%
279%
15%
18%
55%
-20%
19%
101%
45%
13%
89%
22%

12%
-17%
31%
6%
-43%
-7%
31%
-8%
-14%
278%
-19%
-62%
-73%
2%
-14%
-4%
-12%
35%
18%
-20%
-28%
6%
5%
-2%

31%
19%
25%
24%
15%
24%
33%
21%
40%
13%
11%
7%
1%
42%
38%
23%
14%
13%
15%
20%
16%
35%
22%
25%

1417
579
530
535
343
390
322
170
483
52
109
61
-55
269
247
103
80
23
70
120
40
111
37
5815

258%
1%
-12%
39%
5%
38%
29%
48%
189%
172%
15%
-82%
-148%
281%
14%
13%
76%
-44%
9%
30%
120%
20%
159%
53%

28%
-20%
30%
18%
-20%
0%
31%
-15%
-15%
173%
17%
-43%
-263%
-7%
-17%
-66%
-17%
98%
14%
66%
-35%
11%
26%
4%

20%
15%
15%
15%
11%
16%
17%
10%
31%
3%
8%
6%
-5%
29%
29%
12%
11%
3%
11%
21%
8%
24%
13%
17%

Cement Sector
Cement companies reported in line volume growth in
3QFY16 as north-central players posted sequential
acceleration (and de-growth contracted in south. As per
core industries data, cement production grew by 4.3% yoy
in Q3FY16, similar to 4.2% yoy growth in Q3FY15. The
earnings of cement companies were supported by low
power and fuel cost, freight cost and better volume growth,
whereas realisations remained under pressure. The north-

based players (Shree Cement, JK Lakshmi Cement and ACC)

reported a relatively better volume growth however
realizations suffered. The southern players although were
affected by lower capacity utilisations but better pricing
d i s c i p l i n e h e l p e d i n s u p p o r t i n g e a r n i n g s g row t h .
Companies with recent expansions led volume
outperformance. Management commentary suggest for 810% growth in east, followed by 3-5% in north & west and
de-growth of 4-5% in south.

21

MARCH 2016
Q3FY16 Report

UltraTech Cement reported good performance for Q3FY16

with EBITDA/mt at Rs. 968, up 9.5% YoY and Volume
growth by 7.1% YoY was above industry growth. ACC
reported lower than expected results, with aggregate
EBITDA/mt stood at Rs. 469, up only 6.7% YoY and Volume

at 6.0mnmt rose 4.3% YoY. Profitability declined due to

higher freight cost, employee cost and depreciation
expense. Ambuja Cement's reported in line numbers, with
aggregate EBITDA/mt stood at Rs. 615, down 3.4% YoY and
Volume at 5.5mnmt rose 2.1% YoY.

Cement Sector
Company (Rs Cr)

Net
Sales

YoY
%

QoQ
%

Operating
Profit

YoY
%

QoQ
%

OPM
%

Net
Profit

YoY
%

QoQ
%

NPM
%

UltraTech Cem.

6188

4%

3%

1192

16%

13%

19%

546

36%

28%

9%

ACC

2912

3%

4%

280

9%

-11%

10%

102

-69%

-11%

4%

Ambuja Cem.

2379

-1%

13%

328

-9%

6%

14%

110

-67%

-28%

5%

Shree Cement

1829

18%

6%

426

39%

10%

23%

103

10%

-20%

6%

Prism Cement

1328

-1%

-5%

71

94%

47%

5%

-12

70%

63%

-1%

India Cements

937

-10%

-13%

154

-6%

-33%

16%

147%

-87%

1%

J K Cements

903

13%

4%

126

26%

16%

14%

17

2%

24%

2%

The Ramco Cement

821

1%

-8%

253

95%

-14%

31%

117

389%

-16%

14%

Birla Corpn.

807

7%

-1%

48

22%

42%

6%

-56%

-64%

1%

JK Lakshmi Cem.

648

17%

0%

67

2%

9%

10%

-4

-120%

75%

-1%

OCL India

614

14%

15%

106

12%

38%

17%

37

29%

120%

6%

Heidelberg Cem.

408

-2%

1%

63

3%

25%

15%

190%

324%

2%

354

-8%

-1%

24

-61%

-37%

7%

-13

-142%

-147%

-4%

20129

4%

2%

3138

16%

4%

16%

1025

-16%

-1%

5%

Orient Cement
Total
Source: Capitaline

penetration aids topline growth, TRAI regulations, revised

Telecom Sector
Telecom sector continues to report solid performance on

capex guidance, and increased spending on advertising and

operational front but higher finance costs on spectrum

promotional activities amid tepid competition from new

payouts and higher spent on promotional activities against

entrants would add pressure on margins in the short to

heavy competition drag the profitability of telecom

medium term.

companies. Indicators, third quarter traditionally remains

Bharti Airtel's numbers came below the estimate, Voice

the strong quarter for telcos. While data revenue growth

RPM declined 2.4% qoq and data revenue grew 10% qoq.

was strong; voice RPM declined QoQ for all telcos by ~1-

Revenue growth was driven by increase in India business,

3%.

partially offset by decline in the international segment.

In short term, margins of major companies are expected to

Idea's result was in- line on all front. Top- line grew on

remain under pressure owing to the aggressive launch of

account of 12.5% QoQ increase in volume and 3.2% QoQ

4G services and the higher spent on promotional activities

to gain market share. Though data growth and increasing
Telecom Sector
Company (Rs Cr)
Bharti Airtel

Net
Sales

YoY
%

24103

4%

QoQ Operating
%
Profit
1%

YoY
%

QoQ
%

OPM
%

Net
Profit

YoY
%

QoQ
%

NPM
%

8111

8%

-2%

34%

1117

-22%

-27%

5%

Idea Cellular

9010

12%

4%

3129

14%

2%

35%

764

0%

-6%

8%

Rel. Comm.

5277

-3%

-1%

1782

-2%

2%

34%

171

-15%

10%

3%

Tata Comm

5100

4%

-1%

760

-5%

-5%

15%

22

-80%

264%

0%

Bharti Infra.
Total

22

3093

5%

2%

1343

5%

3%

43%

565

12%

-2%

18%

46583

5%

1%

15124

7%

0%

32%

2639

-13%

-14%

6%

BUDGET 2016-17

Consumer Durables
India's consumer durables sector is experiencing robust

reach US$10,073 (in constant 2014 prices) by 2030. This

demand growth on the back of favorable demographics,

level of median income would transfer the consumer

rising rural incomes, increasing urbanization and change in

spending of Indian middle class from bottom of the

lifestyle trends. The World Bank recently predicted that

pyramid market towards a greater and more sophisticated

India will benefit from a demographic dividend for years

level. The per capita income is expected to expand at a

to come. According to the report, it estimated that Indian

CAGR of 8.6% for the period 2015-19 as shown below.

working-age population aged 15-64 may rise by 125mn

over the next decade and may constitute 20% of the
world's working age population.

The consumer durables sector revenue was $9.7bn in

2015. It is forecasted to grow at a CAGR of 13% between
FY05 to FY20 to reach $20.6bn. According to a recent EY
report, consumer durables account for more than 40% of

Rising middle class income will give discretionary

end consumer spending in India. It enjoys an annual

spending power to the middle class, thereby aiding

turnover of ~RS500bn and contributes more than Rs150bn

consumer durables demand

in revenues to the central and state governments. The

According to the Euromonitor, the Indian median income

per household is set to increase by 89.8% in real terms to

sector contributes to more than 5.5% of IIP. About twothird of the revenue is generated from urban population
and one-third from rural population.

Rising per capita income in India

2500

10%
8%

2000

6%
1500

4%

1000

2%
2302.5

2128.8

1978.6

1832.8

1702.1

1595.7

1504.5

1514.6

1552.5

1430.2

0%
500
0

-2%
-4%

FY10

FY11

FY12

FY13

GDP per capita, current prices (USD)

FY14

FY15E

FY16F

FY17F

FY18F

FY19F

Growth Rate
Source: IMF, World Bank, TechSci Research

23

MARCH 2016
SECTOR OUTLOOK: CONSUMER DURABLES

Shares in the consumer durables market in India

(FY15)

Size of the consumer durables market (USD billion)

20.6

12.5

33%
Urban

9.7
4.7 5.2
3.5 3.8 4.2

6.3

7.3 7.3 7.4

67%

Rural

Source: Ministry of Urban Development, TechSci Research, Ministry of

External Affairs

Source: Electronic Industries Association of India

Categorization
The consumer durable sector is broadly divided into 3 categories - white goods, brown goods and consumer electronics as
shown below.

White Goods
Refrigerators
Air Conditioners
Washing Machines
Sewing Machines
Watches and Clocks
Cleaning Equipments

Brown Goods

Consumer Electronics

Microwave Ovens

TVs

Cooking Products

LCDs/LEDs

Chimneys

Audio and video systems

Mixers and Grinders

Electronics accessories

Electronic Fans

Laptops/Computers

Irons

Mobile Phones

Other domestic appliances

Digital Camera
DVDs and Camcorders

White Goods: Refrigerators and Air Conditioners (ACs) enjoy

the maximum market share in the consumer appliances
markets at ~30% and ~14% respectively. The market size
of the refrigerators stood at $1.45bn in 2015 while that of
air conditioners was $1.6bn in 2014. Between 2014 to
2020, they are expected to grow at a CAGR of 10% and
7 % re s p e c t i ve l y. S o m e of t h e key p l a ye rs i n t h e
refrigerator segment are Whirlpool, LG and Godrej while
that in the ACs segment are Blue Star, LG, Hitachi and
Videocon. Washing machines segment is mainly enjoyed by
Whirlpool, Godrej, LG, Videocon and Onida. Although the
white goods markets have been growing fast, it still
remains underpenetrated as shown below

24

BUDGET 2016-17

Brown goods: The branded fan market is estimated to be

The Set-Top Box (STB) market is also growing rapidly on the

around $0.83bn in 2015. Other products such has

back of expansion of DTH and entry of the Conditional

microwave ovens have lesser penetration owing to

Access System (CAS) in metros. The DTH subscriber base

consumer preference for gas cooking. Microwave cooking is

reached 78.74mn as of June 2015 and is expected to reach

perceived as unhealthy in many parts of India.

200mn by 2018, making India one of the world's largest

Consumer Electronics: Indian consumer electronics has a

DTH markets. The DTH penetration currently stands at ~7%

market share of around 28% in the Indian electronics

and is forecasted to reach 20% by 2020, thanks to the

industry by revenues as shown below. However, majority

government's digitization plans.

(~65%) of the consumer electronics demand is met from

imports from regions like China and SE Asia primarily due

DTH subscribers (mn units)

to low cost production and various free trade agreement.

According to an EY report, consumer electronics market is
expected to reach $29bn by 2020 from ~$10bn currently.

CAGR:36%

200.00

79

2015

2018E

Source: TRAI Annual Report 2015, Make in

India, TechSci Research,IBEF

Factors which will drive the demand for consumer

Color TVs, Liquid Crystal Displays (LCDs) and mobile
phones are the major contributors to this segment. India

durables sector

Falling inflation and interest rates will boost consumer

demand. India's consumer prices have eased to 5.7% in

stands at 4th position in the top ten global smart phone

markets. Samsung is the leader in the smartphone segment

January 2016 from an all-time high of 11.2% in

in India enjoying ~42% market share (in value terms) in

November 2013. Falling energy prices and lower import

2015 while LG has a greater presence in other consumer

bills have been one of the primary contributors to lower

durables like refrigerators, air conditioners, flat panel TVs

inflation. Meanwhile, the interest rates (repo rate) have

and microwave ovens.

also fallen from 8% in 2013 to 6.75% now. This will

likely spur consumer discretionary spending.

Market share of players in the consumer durables market

(2014)
68%
58%
57%
44%
27%29%

Falling crude oil prices to benefit consumer durables

sector partially offset by weakening rupee: Crude oil
prices have fallen from $100/ barrel to around
$30/barrel now in less than two years. Similarly other
metal prices like aluminum, zinc and nickel are also

20%
12%

20%23%

trading at multi-year lows. Falling raw material prices is

21%21%

benefitting the consumer durables companies, thereby

aiding their bottom line. However, falling rupee may

Microwave

Air Conditioner*

Refrigerator

Source: Company Website, TechSci Research

*Data for Air Conditioner is for 2015

Flat TV

Samsung
LG
Others

limit the benefit to be completely passed on to the

customers. Indian rupee has depreciated by more than
10% over last one year and is trading near to an alltime low of 68.7 against the dollar.

25

MARCH 2016
SECTOR OUTLOOK: CONSUMER DURABLES

120
USDINR

100
WTI Crude Oil

80
60
40
20

01-Dec-15

01-Jun-15

01-Dec-14

01-Jun-14

01-Dec-13

01-Jun-13

01-Dec-12

01-Jun-12

01-Dec-11

01-Jun-11

01-Dec-10

01-Jun-10

Source: Bloomberg

Rural demand will be driven by robust agricultural

in consumption boost of around Rs. 61,260cr or 0.39%

output: Agricultural output had taken a hit last year on

of GDP and household savings is estimated to increase

account of below normal rainfall levels, thereby

by Rs. 40,840cr or 0.26% of GDP. Potential increase in

limiting rural consumer spending. This had led to soft

consumption will likely boost demand for consumer

volume numbers in the consumer durables sector.

durables too on account of changing lifestyles. Higher

Thus, it is very important for the agricultural output to

disposable income will likely lead to consumption of

drive domestic demand.

The upcoming 7th Pay Commission to boost consumer

demand: The government is planning for wage hikes
for central government employees and One Rank One
Pension for defense personnel under its upcoming pay
commission. The impact of the pay commission,
according to a report by rating agency ICRA, will result

26

premium range products. Last time when the Sixth Pay

Commission recommended a large salary hike of ~35%
on average, it was implemented from September 2008
but was applicable from January 2006. This led to
considerable pay-outs of arrears (~40% in FY09 and
~60% in FY10) which led to a sustained increase in
consumption.

BUDGET 2016-17

Goods and Services Tax (GST) implementation will

benefit the organized players and boost their
profitability: Indian retail industry is mostly comprised
of unorganized sector as they enjoy a market share of
more than 80%. Lower GST will level out the existing
players and benefit the organized sector more as their
reported taxes would come down. However, the GST
implementation is hanging in between due to
opposition from the Congress party.

Lower excise duty may boost domestic demand: The

government rolled back its plans to lower excise duty
by 2% last year thereby hurting the profitability of
consumer players. Any potential cut in excise duty
may boost the consumer durable sector.

Make in India program to boost local manufacturing of

durables goods: The BJP government has recently
launched 'Make In India' program to boost local
manufacturing. This move may drive higher
investments thereby benefiting the consumer durables
sector. India can emerge as a great manufacturing hub
over the coming years provided it receives adequate
support from the government on various factors as
shown below.

Higher FDI investments can boost the durable sector

output: 100% FDI is allowed in the electronics
hardware-manufacturing sector under the automatic
route. In addition, the approval of 51% FDI in multibrand would further fuel the growth in this sector

IBEF report, online retail marketing will likely grow at a

CAGR of 40-45% during 2014-2018.

Focus on energy-efficient and environment friendly

products is positive in the long run: Many durable
companies have introduced a Star rating in products
like ACs and refrigerators which denotes their energy
efficiency.

Growing luxury market may prop up demand for high

end premium products in consumer durable sector:
With rising per capita income and increasing number
of women in the work force, the demand for premium
products is likely to increase. Eg:- the stand out
success of the sales of Samsung's premium smart
phone model 'Note' series in the mobile phones
segment.

Tie up with e-commerce companies, offering

advanced technologies, lower financing options and
occasion based marketing may be effective strategies
for higher sales: Many consumer durable companies
are tying up with ecommerce players, offering huge
discounts to boost their sales. Also, the presence of etailers like Croma, Ezone etc. are leading to greater
visibility and increased preference options among
consumers. Easy consumer financing support offered
by companies like Bajaj Finserv etc. adds to consumer
convenience.

Gradual shift from import oriented to export oriented

may boost the consumer durables sector: Of late,
exports from India is also picking up pace. Over FY1014, exports of AC, washing machines, refrigerators, and
television have been growing at a CAGR of 20%,
55%,8% and 3% respectively.UAE has been the major
export partner for India and Indian companies are
effectively using the Dubai channel to reach the rest
of Middle East(ME) region and Africa. Many global
leading players are looking to build India as a base of
exports to ME and SAARC region.

Scaling of R&D centers and expansion plans by key

players is positive: According to the IBEF report, FDI in
telecommunication and electronic sectors until
September 2015 stood at $17.8bn and $1.53bn
respectively. The most significant deal signed in 2015
was by Foxconn which had announced to invest
around $5bn in India over the next five years to set up
R&D centres and manufacturing plants. Some other
telecom companies like Samsung, LG and Celkon
Mobiles have also committed to expansion plans.

Online retail marketers such as Snapdeal, Flipkart and

Amazon are offering attractive discounts, thereby
leading to higher penetration in the consumer
durables sector. Also e-retailers like Tata Croma,
Reliance Digital and E zone are increasing the
awareness of different durable products. According to

27

MARCH 2016
ECONOMY REVIEW

The finance minister has been able to do a balancing act or

increased the service taxes to 16% as widely expected but

at least tried to do with the Union Budget 2016-17. Just as

has proposed to implement Krishi Kalyan cess of 0.5% of

the rail budget, the Union Budget didnt have any major

all taxable services (w.e.f. 1st June ITC available with cenvat

negative surprises and thus should be considered mildly

benefit) and expects to garner Rs 5000 crore together with

positive. The essence of the budget has been the nine

Rs 10,000 crore budgeted from Swacch Bharat Cess

pillars the finance minister stresses on for economic growth

(against Rs 3750 cr according to revised FY16 estimates).

- Agriculture and farmer welfare, Rural sector, Social sector

Overall, FY17 revenue receipt has been budgeted 14.2%

including healthcare, Educational skills and job creation,

higher compared to revised FY16 estimates. Of the revenue

Infrastructure investment, Financial sector reforms,

receipts, tax revenue (net) growth has been realistically

Governance reforms, Fiscal prudence and Tax reforms.

assumed at 11.2% while non-tax revenues at 24.9%.

Majority of the announcements have been on the expected

Capital receipts have been budgeted to grow by 3.8% over

lines for instance the government had to give greater focus

FY16 revised estimates. On the expenditure side, non-plan

towards the rural sectors given two back to back monsoon

expenditure has been budgeted at 9.2% higher while Plan

adversely affecting rural income. Most of the

Expenditure at 15.3% higher than revised FY16 estimates.

recommendations have been to promote inclusive growth

The net market borrowings have been kept at Rs

and there have been statutory backing to AADHAR platform

425180.87 crore, slightly lower than the FY16 revised

for all kinds of subsidy payments from Government. The

figures of Rs 440608.06 crore. However, the figures are

biggest positive has been non deviation from the fiscal

lower than what the markets thought and together with

consolidation plans. But having stuck to the fiscal deficit

sticking to fiscal consolidation plan; it raises hopes for a

target at 3.9 % for FY 16 and 3.5% for FY17, there has

rate cut by the RBI. The nominal GDP growth is projected at

been limited additional resource base to fuel the GDP

a slightly higher rate of 11% in FY2017 as against 8.5% in

growth. Of the additional resource base of just about Rs

FY2016. However, how far the budget will support

90,000 crore, Rs 25,000 crore is needed to recapitalize

economic growth is doubtable considering there are

banks and another Rs 40,000 crore for capital investment.

challenges implementing OROP and 7th Pay Commission.

The finance minister thus couldnt go on to please India Inc

Important announcements under nine pillars are:

with a minimum 1% decline in the corporate tax rate nor

was there any change in the personal tax slabs, which is
understandable. Small Corporate Tax Payers however gets
to pay corporate taxes @ 29% and for start ups, there is a

1. Agriculture and Farmers Welfare

Tax holiday for 3 of 5 years of setting up the company.

There is some relief for small tax payers (on personal

Allocation for Agriculture and Farmers welfare is Rs

35,984 crore

Pradhan Mantri Krishi Sinchai Yojana to be

income tax front) as ceiling of tax rebate under Section

implemented and 28.5 lakh hectares will be

87A of IT Act has been proposed to be raised to Rs 5,000

brought under irrigation.

from Rs 2,000 for individuals with income less than Rs. 5

lakhs. Besides, benefit under section 80GG limit has been
extended from Rs 24,000 to Rs 60,000 p.a for people not
having their own house nor receiving any HRA. However,

12% to 15% for person having income more than Rs 1

crore (other than company). The Union Budget has not

28

A dedicated Long Term Irrigation Fund will be

created in NABARD with an initial corpus of about

there are few instances that the government is prepared to

tax the super rich as surcharge has been increased from

Implementation of 89 irrigation projects under AIBP

will be fast tracked

Rs 20,000 crore

Programme for sustainable management of ground

water resources with an estimated cost of Rs 6,000
crore

BUDGET 2016-17

5 lakh farm ponds and dug wells in rain fed areas

and 10 lakh compost pits for production of organic
manure will be taken up under MGNREGA

has been revamped

New scheme Rashtriya Gram Swaraj Abhiyan

proposed with allocation of Rs 655 crore.

Soil Health Card scheme will cover all 14 crore

farm holdings by March 2017.

2,000 model retail outlets of Fertilizer companies

will be provided with soil and seed testing facilities

3. Social sector including health care

health care pegged at Rs 1,51,581 crore.

during the next three years

Unified Agricultural Marketing ePlatform to provide

Allocation under Pradhan Mantri Gram Sadak Yojana

citizens an additional top-up package up to Rs

remaining 65,000 eligible habitations by 2019.

30,000 will be provided

To reduce the burden of loan repayment on

farmers, a provision of RS 15,000 crore has been

3,000 Stores under Prime Ministers Jan Aushadhi

Yojana will be opened during 2016-17.

m a d e i n t h e B E 2 0 1 6 - 1 7 t ow a rd s i n t e re s t
subvention

New health protection scheme will provide health

cover up to RS One lakh per family. For senior

increased to Rs 19,000 crore. Will connect

Rs 2,000 crore allocated for initial cost of providing

LPG connections to BPL families.

a common e-market platform for wholesale markets

Allocation for social sector including education and

Stand Up India Scheme to facilitate at least two

Allocation under Prime Minister Fasal Bima Yojana

projects per bank branch. This will benefit at least

Rs 5,500 crore.

2.5 lakh entrepreneurs.

Rs 850 crore for four dairying projects - Pashudhan

Sanjivani, Nakul Swasthya Patra, E-Pashudhan
Haat and National Genomic Centre for indigenous
breeds

4. Education, skills and job creation

62 new Navodaya Vidyalayas will be opened

Sarva Shiksha Abhiyan to increasing focus on

quality of education

2. Rural sector

public and ten private institutions to emerge as

crore.

world-class Teaching and Research Institutions

Rs 2.87 lakh crore will be given as Grant in Aid to

Gram Panchayats and Municipalities as per the

recommendations of the 14th Finance Commission

Regulatory architecture to be provided to ten

Allocation for rural sector pegged at Rs 87,765

Every block under drought and rural distress will be

taken up as an intensive Block under the Deen

Higher Education Financing Agency to be set-up

with initial capital base of Rs 1000 Crores

Allocation for skill development Rs 1804 crore.

1500 Multi Skill Training Institutes to be set-up and

Entrepreneurship Education and Training through

Dayal Antyodaya Mission

Massive Open Online Courses

A sum of Rs 38,500 crore allocated for MGNREGS.

300 Rurban Clusters will be developed under the

employees enrolling in EPFO for the first three

Shyama Prasad Mukherjee Rurban Mission

years of their employment. Budget provision of Rs

100% village electrification to be achieved by 1st

1000 crore for this scheme.

May, 2018

National Land Record Modernisation Programme

GoI will pay contribution of 8.33% for of all new

Deduction under Section 80JJAA of the Income Tax

Act will be available to all assesses who are subject
to statutory audit under the Act

29

MARCH 2016
ECONOMY REVIEW

5. Infrastructure and investment

Total investment in the road sector, including

PMGSY allocation, would be Rs 97,000 crore during

2016-17.

Indias highest ever kilometres of new highways

Allocation of Rs 25,000 crore towards

recapitalisation of Public Sector Banks.
Target of amount sanctioned under Pradhan Mantri
Mudra Yojana increased to Rs 1,80,000 crore.

were awarded in 2015. To approve nearly 10,000

General Insurance Companies owned by the

Government to be listed in the stock exchanges

kms of National Highways in 2016-17.

Allocation of Rs 55,000 crore in the Budget for

Roads. Additional Rs 15,000 crore to be raised by
NHAI through bonds.

7. Governance and ease of doing business

Total outlay for infrastructure pegged at Rs

Ministries.

2,21,246 crore.

To provide calibrated marketing freedom in order to

Aadhar framework to be introduced.

deep-water and high pressure-high temperature

areas

Introduction of DBT on pilot basis for fertilizer.

Reforms in FDI policy in the areas of Insurance and

Automation facilities will be provided in 3 lakh fair

price shops by March 2017

Pension, Asset Reconstruction Companies, Stock

Exchanges

manufactured in India.

Price Stabilisation Fund with a corpus of Rs 900

crore to help maintain stable prices of Pulses.

Ek Bharat Shreshtha Bharat programme will be

launched to link States and Districts in an annual

6. Financial sector reforms

programme that connects people through

A comprehensive Code on Resolution of Financial

exchanges in areas of language, trade, culture,

Firms to be introduced.

Amendments in Companies Act to improve enabling

environment for start-ups.

100% FDI to be allowed through FIPB route in

m a r ke t i n g o f fo o d p ro d u c t s p ro d u ce d a n d

Bill for Targeted Delivery of Financial and Other

Subsidies, Benefits and Services by using the

incentivise gas production from deep-water, ultra

A Ta s k F o r c e h a s b e e n c o n s t i t u t e d f o r
rationalisation of human resources in various

travel and tourism.

Statutory basis for a Monetary Policy framework

and a Monetary Policy Committee through the
Finance Bill 2016.

New derivative products will be developed by SEBI

8. Fiscal discipline

retained at 3.9% and 3.5% respectively

in the Commodity Derivatives market.

Amendments in the SARFAESI Act 2002 to enable

the sponsor of an ARC to hold up to 100% stake in

the ARC and permit non institutional investors to

and Inland Water Authority by raising bonds.

schemes.
Increasing members and benches of the Securities
Appellate Tribunal.

Plan / Non-Plan classification to be done away with

from 2017-18.

Comprehensive Central Legislation to be bought to

deal with the menace of illicit deposit taking

Mobilisation of additional finances to the extent of

Rs 31,300 crore by NHAI, PFC, REC, IREDA, NABARD

invest in Securitization Receipts.

Fiscal deficit in RE 2015-16 and BE 2016-17

Every new scheme sanctioned will have a sunset

date and outcome review.

More than 1500 Central Plan Schemes have been

rationalized into about 300 Central Sector and 30
Centrally Sponsored Schemes.

30

BUDGET 2016-17

Committee to review the implementation of the

FRBM Act has been set up.

2016-17 for first time home buyers, where house

Ceiling of tax rebate under section 87A has been

cost does not exceed RS 50 lakh

raised from Rs 2000 to Rs 5000 to lessen tax

burden on individuals with income upto Rs 5 lakhs.

New manufacturing companies incorporated on or

not be subjected to Dividend Distribution Tax, in

respect of dividend distributed after the specified

25% + surcharge and cess provided they do not

date.

claim profit linked or investment linked deductions

any scheme of the Central or State Government

Corporate tax rate lowered for the next financial

including PPP Schemes

year for relatively small enterprises i.e companies

with turnover not exceeding Rs 5 crore (in the

surcharge and cess.

use in construction work to ready mix concrete.

100% deduction of profits for 3 out of 5 years for

of dividend will be payable by the recipients

exploitation of patents developed and registered in

annum.

Complete pass through of income-tax to

persons, other than companies, firms and

cooperative societies having income above RS 1

Securitisation trusts required to deduct tax at

crore.

regime in case of unlisted companies is proposed

lakh and purchase of goods and services in cash

to be reduced from three to two years.

exceeding RS two lakhs.

Non-banking financial companies shall be eligible

Securities Transaction tax in case of Options is

proposed to be increased from 0.017% to 0.05%.

Equalization levy of 6% of gross amount for

Withdrawal up to 40% of the corpus at the time of

payment made to nonresidents exceeding RS 1 lakh

retirement to be tax exempt in the case of National

a year in case of B2B transactions.

Pension Scheme (NPS).

Tax to be deducted at source at the rate of 1% on

purchase of luxury cars exceeding value of RS ten

Period for getting benefit of long term capital gain

respect of provision for bad and doubtful debts.

Surcharge to be raised from 12% to 15% on

securitization trusts including trusts of ARCs.

for deduction to the extent of 5% of its income in

Additional tax at the rate of 10% of gross amount

receiving dividend in excess of RS 10 lakh per

source.

9. Tax reforms

10% rate of tax on income from worldwide

India by a resident.

Extension of excise duty exemption, presently

available to concrete mix manufactured at site for

startups setup during April, 2016 to March, 2019.

financial year ending March 2015), to 29% plus

MAT will apply in such cases.

Exemption from service tax on construction of

affordable houses up to 60 square metres under

accelerated depreciation.

Distribution made out of income of SPV to the

REITs and INVITs having specified shareholding will

after 1.3.2016 to be given an option to be taxed at

and do not avail of investment allowance and

Deduction for additional interest of RS 50,000 per

annum for loans up to RS 35 lakh sanctioned in

Krishi Kalyan Cess, @ 0.5% on all taxable services,

w.e.f. 1 June 2016. Proceeds would be exclusively

In case of superannuation funds and recognized

provident funds, including EPF, the same norm of

used for financing initiatives for improvement of

40% of corpus to be tax free will apply in respect

agriculture and welfare of farmers. Input tax credit

of corpus created out of contributions made on or

of this cess will be available for payment of this

from 1.4.2016.

cess.

Reduction of service tax on Single premium Annuity

Infrastructure cess, of 1% on small petrol, LPG,

(Insurance) Policies from 3.5% to 1.4% of the

CNG cars, 2.5% on diesel cars of certain capacity

premium paid in certain cases.

and 4% on other higher engine capacity vehicles

31

MARCH 2016
ECONOMY REVIEW

and SUVs. No credit of this cess will be available

nor credit of any other tax or duty be utilized for
paying this cess

Excise duty of 1% without input tax credit or

assumed at 11% over advance estimates, a bit on the

higher side thus lowering deficit numbers. The same is the

diamonds and some other precious stones], with a

case with the fiscal deficit target of 3.5% for FY17,

higher exemption and eligibility limits of RS 6

however the absolute numbers have been almost identical

Excise levied on readymade garments with retail

input tax credit or 12.5% with input tax credit.

as FY16 revised numbers. Now the bigger question is can

11% nominal GDP growth be achieved under the
c h a l l e n g i n g c i rc u m s t a n ce s . T h e b u d ge t h a s b e e n
satisfactory on the grounds that it has emphasized on
inclusion and rationalizing the tax and subsidies with

Clean Energy Cess levied on coal, lignite and peat

greater focus on rural, infra and social spending. However,

renamed to Clean Environment Cess and rate

it has not been pro growth to target for a 11% nominal

increased from RS 200 per tonne to RS 400 per

growth. Thus, unless the same is achieved, all the relative

tonne.

measures revenue deficit, fiscal deficit targets will appear

Excise duties on various tobacco products other

challenging.

than beedi raised by about 10 to 15%.

32

of GDP as against 2.5% for the revised FY16 estimates. Of

course, the base or nominal GDP growth have been

12.5% with input tax credit on articles of jewellery

price of RS 1000 or more raised to 2% without

Revenue Deficit for FY17 has been budgeted lower at 2.3%

[excluding silver jewellery, other than studded with

crores and RS 12 crores respectively.

Budget Analysis

BUDGET 2016-17

Budget Estimates for 2016-2017:

Particulars (Rs. Crores.)
Revenue Receipts

2014-15
Actuals

2015-16
Budget
Estimates

2015-16
Revised
Estimates

2016-17
Budget
Estimates

1101472

1141575

1206084

1377022

Tax Revenue (net to centre)

903615

919842

947508

1054101

Non-Tax Revenue

197857

221733

258576

322921

Capital Receipts (5+6+7)$

562201

635902

579307

601038

Recoveries of Loans

13738

10753

18905

10634

Other Receipts

37737

69500

25312

56500

Borrowings and other

liabilities *

510725

555649

535090

533904

Total Receipts (1+4)$

1663673

1777477

1785391

1978060

Non-Plan Expenditure

1201029

1312200

1308194

1428050

10

On Revenue Account of which

1109394

1206027

1212669

1327408

11

Interest Payments

402444

456145

442620

492670

12

On Capital Account

91635

106173

95525

100642

Plan Expenditure

462644

465277

477197

550010

14

On Revenue Account

357597

330020

335004

403628

15

On Capital Account

105047

135257

142193

146382

Total Expenditure (9+13)

1663673

1777477

1785391

1978060

17

Revenue Expenditure (10+14)

1466992

1536047

1547673

1731037

18

Of Which, Grants for creation

of Capital Assets

130760

132472

132004

166840

19

Capital Expenditure (12+15)

196681

241430

237718

247023

365519

394472

341589

354015

(2.9)

(2.8)

(2.5)

(2.3)

Effective Revenue Deficit (20-18)

234759

268000

209585

187175

(1.9)

(2.0)

(1.5)

(1.2)

Fiscal Deficit {16-(1+5+6)}

510725

555649

535090

533904

(4.1)

(3.9)

(3.9)

(3.5)

108281

99504

92469

41234

(0.9)

(0.7)

(0.7)

(0.3)

Revenue Deficit (17-1)

Primary Deficit (22-11)

*http://indiabudget.nic.in/glance.asp
Notes:

GDP for BE 2016-2017 has been projected at Rs. 15065010 crore assuming 11% growth over the Advance Estimates of 2015-2016
(Rs. 13567192 crore) released by CSO.

Individual items in this document may not sum up to the totals due to rounding off.

Gross Tax revenues have been budgeted at 11.7% higher

based on higher nominal GDP numbers but in difficult

while direct taxes are budgeted 12.6% higher based on

global scenario and dwindling corporate revenue, how

18% higher collections from income tax while in reality the

much of that can be achieved remains questionable.

FY16 revised numbers have been lowered by 9% as

Indirect taxes on the other hand have been budgeted a

against FY16 budgeted. Such, strong expectations are

modest growth of 10.8% over FY16 RE numbers. Given the

33

MARCH 2016
ECONOMY REVIEW

traction and the initiatives taken, the government might

government has actually budgeted a mere 3.9% growth in

actually collect higher than the budgeted numbers and

capital expenditure while 11.8% has been budgeted for

might compensate for the decline in direct tax numbers as

revenue expenditure. At a time, when the private capex is

has been the case for FY16 so far. Non tax revenue in the

still to show any signs of revival, a lower than expected

form of spectrum receipts and disinvestment are to be the

allocation towards capital expenditure will certainly not

key drivers of revenue collection. Divestment has been

help to achieve 11% growth in nominal GDP. Thus, the

budgeted 123% higher. However, the government should

fiscal consolidation is budgeted at the cost of foregone

have put on a more realistic number after the dismal

capital expenditure.

performance in FY16. On the expenditure front, the

(in Rs Cr)

FY16 BE

FY16 RE

% change

FY17 BE

% change over RE

RECEIPTS

1777477

1785391

0.4%

1978060

10.8%

1. Revenue

1141575

1206084

5.7%

1377022

14.2%

1.1 Gross Tax

1449490

1459611

0.7%

1630888

11.7%

1.1.1 Direct tax

797995

752021

-5.8%

847097

12.6%

(a) Corporate tax

470628

452970

-3.8%

493923

9.0%

(b) Income tax

327367

299051

-8.6%

353174

18.1%

1.1.2 Indirect taxes

647918

703642

8.6%

779670

10.8%

(a) Customs

208336

209500

0.6%

230000

9.8%

(b) Excise duties

229808

284142

23.6%

318670

12.2%

(c) Service Tax

209774

210000

0.1%

231000

10.0%

3577

3948

10.4%

4121

4.4%

523958

506193

-3.4%

570337

12.7%

5690

5910

3.9%

6450

9.1%

1.1.3 Others
State share
Transfer To Contingency Fund
1.1 Net tax to centre

919842

947508

3.0%

1054101

11.2%

1.2 Non-tax Revenue

221733

258576

16.6%

322921

24.9%

1.2.1 Interest

23600

23142

-1.9%

29620

28.0%

100651

118271

17.5%

123780

4.7%

1.2.3 Others

97482

117163

20.2%

169521

44.7%

2. Non-debt capital receipts

80253

44217

-44.9%

67134

51.8%

1.2.2 Dividends and profits

2.1 Recovery of loans

10753

18905

75.8%

10634

-43.8%

2.2 Disinvestment

69500

25312

-63.6%

56500

123.2%

EXPENDITURE

1777477

1785391

0.4%

1978060

10.8%

1 Revenue

1536047

1547673

0.8%

1731037

11.8%

-1.5%

247023

3.9%

2 Capital
Fiscal Deficit

241430

237718

-555649

-535090

-533904

3.9

3.9

3.5

(% of GDP)

Key Sectoral Announcements & Impact

exceeding 1500cc 2.5%, Other higher engine

capacity and SUVs and bigger sedans 4%

Auto sector

34

Negative: Infrastructure Cess being levied on motor

vehicles (Petrol/LPG/CNG driven motor vehicles of
length not exceeding 4m and engine capacity not
exceeding 1200cc 1%, Diesel driven motor vehicles
of length not exceeding 4m and engine capacity not

Negative: Tax at source of 1% on purchase of luxury

cars exceeding value of Rs10 lakhs

Negative: Reduced benefit of R&D deduction from

200% to 150% till 2020 and further lower to 100%
from 2020

BUDGET 2016-17

Positive: Time limit of 31 March 2016 removed for Nil

customs duty and 6% excise duty on parts of electric
vehicles

Positive: The customs tariff rate has been hiked from

7.5% to 10% for specified category of capital goods

Negative: Imports of specified goods for defence

purposes by contractors of the Government of India,
PSUs or sub-contractors of PSUs would now attract
basic customs duty, CVD and SAD

Negative: Accelerated depreciation wherever provided

in IT Act will be limited to maximum 40% from April 1,
2017

Positive: Focus on completing Rural electrification by

2018

Positive: Excise duty on electric motor, shafts, sleeve,

chamber, impeller, washer required for manufacture of
centrifugal pump cut to 6%

Airlines

Negative: excise duty on ATF has been increased from

8% to 14%

Banking and finance sector

Positive: Sticking to fiscal consolidation plan will

enable RBI to lower interest rates

Negative: Rs 25,000 crore for recapitalization of PSBs,

lower than market expectations

Positive: Bank Board Bureau to be operationalized

during FY17

Positive: Roadmap for consolidation of PSBs is on the

cards

Positive: Divestment of Government stake below 50%

in IDBI bank

Positive: Deduction for additional interest of Rs

50,000/yr for loans up to Rs 35 lakh sanctioned in
2016-17 for 1st time home buyers
Positive: NBFC shall be eligible for deduction to extent
of 5% of its income in respect of provision for bad
debts

Construction

Positive: Propose 100% deduction to undertakings for

construction of affordable housing

Positive: Increased allocation of Rs 970 Bn for road

construction

Positive: Service tax exempted on low cost houses up

to a carpet area of 60 sq mt per house in a housing
project under state govt housing scheme

Positive: Target of amount sanctioned under Pradhan

Mantri Mudra Yojana increased to Rs. 180,000cr for
FY17

Positive: Raise personal I-T house rent exemption to Rs

60,000 from Rs 24,000/year

Positive: Amendments in SARFAESI Act 2002 to enable

sponsor of an ARC to hold up to 100% stake in ARC

Negative: Service tax of 5.6% has been proposed on

EPC of mono rail or metro related projects in respect
of contracts entered into on or after 1st March 2016

FMCG & Consumer discretionary

Positive: Foreign investment in insurance, pension

sectors up to 49% via automatic route

Negative: Excise duties on various tobacco products

other than beedi raised by about 10% to 15%.

Positive: Propose to launch new health care scheme

with Rs 1 lakh as cover per family

Negative: Levy of 1% excise duty on articles of

Jewellery (Excluding Silver)

Positive: Proposes Rs 5,500 cr for crop insurance

scheme for FY17

Positive: Increase in allocation for MGNREGA from Rs

34,700 crore to Rs 38,500 crore will create higher
demand

Negative: Excise on readymade garments with retail

price of Rs 1,000 or more raised to 2% without input
tax credit or 12.5% with input tax credit

Positive: 100% FDI to be allowed through FIPB route

in marketing of food

Positive: 4 new schemes to enhance dairy farming in

India at Rs 850 cr

Positive: Custom duty reduced to 2.5% from 5.0% on

pulp of wood for manufacture and from 7.5% to 5.0%
o n S u p e r A b s o r b e n t Po l y m e r w h e n u s e d f o r

Cement & Ceramics

Positive: Increase in rural and urban housing spending

Positive: FM allocates Rs 9,000 cr towards Swachh

Bharat Mission

Negative: Clean energy cess increased from Rs

200/tonne to Rs 400/ tonne on coal

Capital Goods

Negative: Capital Expenditure increased by mere 3.8%

in FY17 over FY16 RE

Positive: Focus to boost infra spend

35

MARCH 2016
ECONOMY REVIEW

manufacture of sanitary pads, napkins & tampons

Information Technology

Positive: To incentivise gas production from deep sea

& ultra deep waters

Positive: 1500 Multi Skill Training Institutes to be set

up across the country with a budget of Rs. 1,700cr

Power Generation, Distribution & Transmission

Positive: Propose Rs 8,500 cr for rural electrification

Positive: Section 10 AA benefit to new SEZ extended

till March 2020

Positive: Target is to commission 1000 MW of Solar

Capacity in next 5 years

Positive: Total outlay for Infrastructure sector pegged

at Rs.221,246cr for FY17

Positive: Govt committed to achieve 100% village

electrification by May 1, 2018

Positive: Investment in road sector, including PMGSY

allocation, would be Rs 97000 cr in FY17

Positive: FM allocates Rs 9,000 cr towards Swachh

Bharat Mission

Positive: To issue guidelines for renegotiation of PPP

contracts

Positive: To up FY17 allocation for electrification by

50%

Positive: Allocate Rs 55,000 cr for roads & highways

excluding Rs 15,000 cr NHAI bonds

Negative: Increase in coal cess from Rs.200 per tonne

to Rs.400 per tonne

Pharmaceuticals

Positive: Improvement of suburban transport systems

Positive: Will set up 2 Locomotive Factories at the

cost of Rs 40,000Cr

Negative: Benefit of deductions for research would be

limited to 150% from 1.4.2017 and 100% from
1.4.2020.

Positive: Rs. 800cr allocated for modernizing ports

and increasing their efficiency

Positive: FM propose to exempt parts of dialysis

equipment from basic customs duty

Positive: Higher Funds allocated for Health and family

welfare

Positive: 3,000 Jan Aushadhi Yojana stores to be

opened in FY17

Infrastructure

Metals & Mining

Positive: Propose to scrap export duty on low grade

iron ore

Negative: Clean energy cess for coal Rs 400/tonne

Positive: Increase in BCD (Basic Customs duty) on

Primary Aluminium from 5% to 7.5% and on other
aluminium products from 7.5% to 10%

Positive: Increase in Import duty on Zinc alloys from

5% to 7.5%

Transport & Logistics

Positive: Basic Excise duty lowered from 12.5% to 6%

and customs from 10% to 5% on refrigerated
containers

Positive: Mission to provide LPG gas connection to

women household members

Positive: Propose to set up 3 Freight Corridors

Negative: Deduction under section 35AD reduced from

150% to 100% of capex

Oil & Gas

36

Positive: Cess on crude reduced from Rs 4500/MT to

20% ad valorem

BUDGET 2016-17

Birla Sun Life Top 100 Fund (G)

Large Cap
Fund Objective: The scheme's objective is to provide
medium- to long-term capital appreciation by investing
predominantly in equity and equity-related instruments with
minimum 65 per cent exposure to top 100 companies as
measured by the market capitalisation. The scheme may also
invest in ADR/GDR & equities of listed overseas companies.
Fund Commentary: The scheme takes debt and cash calls
during volatile markets. In general, BSL Top 100 has accorded
a weightage of 5-10 per cent across market cycles to debt
instruments and cash, indicating a relatively cautious
approach. At the sectoral level, compared to the benchmark,
the fund was underweight on banks and petroleum products
and overweight on pharma. Thus, underexposure to these
underperforming sectors and vice versa has helped the fund
in its performance. The scheme has also held on to and
consumer non-durables in varying proportions of
significance depending on the markets, giving it a somewhat
defensive tilt. But the fund also got into quality stocks in the
automobiles and petroleum products sectors, which ensured
adequate participation in the rally driven by cyclicals. Thus
the scheme has managed to have the right blend of
defensive and momentum sectors, which has resulted in
consistent outperformance over years.

Top Ten Holdings

Stocks
HDFC Bank
Infosys
Reliance
HCL Tech
Sun Pharma
ICICI Bank
ITC
Larsen
IndusInd Bank
IOC

Asset Allocation
Equity
94.05%

Conglomerates
Utilities

# as on December 31, 2015

Key Ratios
1.03
15.2
0.68
6.7
94.81
2.33
92.00
72,528

$ as on December 31, 2015

Cash & Equiv.

5.87%

2.18
2.21

Tobacco

2.96

Metals & Mining

3.13

Engineering

6.23

Auto

7.68

Pharma

8.95

Oil & Gas

9.23

Technology

37.14
September 28, 2005
1,760.0
Mahish Patil
N.A
1.50%
NIFTY 50
Rs.5000
Rs. 1000

Beta
Standard deviation (%)
Sharpe Ratio
Alpha
R Squared
Expense ratio (%)
Portfolio Turnover ratio (%)
Avg Market cap (Rs in cr) $

Debt
0.08%
% SECTOR ALLOCATION

Important Information
NAV (Rs.)
Inception Date
Fund size(in Rs cr) #
Fund Manager
Entry load
Exit Load
Benchmark
Min Investment
Min SIP Investment

% of Net assets
6.68
5.77
4.67
3.48
3.34
3.32
2.96
2.79
2.67
2.63

14.1

Financial

26.02
0

10

15

20

25

30

Asset Allocation
Mar-15

Franklin India High Growth Companies Fund (G) -18%

Apr-15

Birla Sun Life Top 100 Fund (G)

May-15

SBI Blue Chip Fund (G)

Jun-15

Kotak Opportunities Fund - Regular Plan (G)

-14%

Jul-15

Franklin India Bluechip Fund (G)

-13%

Aug-15

UTI Mid Cap Fund (G)

-17%

Sep-15

Birla Sun Life Frontline Equity Fund (G)

Oct-15

HDFC Equity Fund (G)

-18%

Nov-15

ICICI Prudential Focused Bluechip Equity (G)

-15%

Dec-15

HDFC Top 200 Fund (G)

-17%

Jan-16

Mirae Asset Emerging Bluechip Fund (G)

-13%

Feb-16

Franklin India Opportunities Fund (G)

-14%
-8%

-9%

-7%

Performance of the Fund

Fund (%)
NIFTY 50 (%)

1 month
-7.67
-7.62

2 month
-12.02
-11.95

6 month
-9.6
-12.3

1 year
-16.27
-21.51

3 years
14.87
7.06

5 years
11.77
5.54

Since Inception
13.5
-

37

MARCH 2016
TECHNICAL REVIEW

Key takeaways from February 2016:

in daily and weekly chart indicates that the broader term

CPI rose to a 16-month high in January, climbing to

5.69% n January compared with 5.61% in December.

trend in the market has changed to negative after

Monthly WPI, stood at -0.90% for the month of January,

2016 as compared to -0.73% for the previous month in
December.
IIP for the month of December has contracted 1.3 versus
-3.2 percent in November.
India's manufacturing PMI rose to 51.1 points in January
from 49.1 in December.
During 2015-16 (April-January) trade deficit decreased
to $106.8 billion compared with $119.6 billion in the
corresponding period of 2014-15

witnessing successive lower low formation in daily and

weekly chart. Since March 2015 onward market had been
in a corrective mode which has further resulted in for Nifty
to trade amidst the downward sloping channel line. Now
the bleeding support from the trendline line stands around
6900. Nifty at the fag end of the month took support from
the trendline and consolidated within a narrow range. Now
according to the said pattern if Nifty confirms of a bottom
then upside gate for the Index opens till 7800 in medium
term perspective.
Distinct bottoms formed in September and December
2015, is the confluence of the long term upward sloping
trend line connecting the major swing lows of 2003, 200809 and 2013. Further the lower boundary of the mediumterm falling channel considering the entire correction since
March 2015 too encompasses around the said level. Hence
until and unless Nifty trades decisively above the 75007550 level negative biasness in the market is likely to
remain.
On the weekly chart Nifty formed inside bar on weekly
scale after a sharp down move. It indicates halt. Follow
through move above 7250 could see index inching towards
7400 else it may remain oscillating within the range. Hence

Classical theory of Technical Analysis

Indian equity market was on a continuous selling spree
throughout the month and ended in red with a decline of
6.12%. Global as well and domestic factors were
responsible for such relentless selling pressure in the
market. Continuous redemption pressure was noticed by
the FII from the emerging market economies like India.
Global weakness, fall in crude oil prices and the failing
Indian rupee act as the catalyst for the market to head
lower. Advance decline ratio for the market remained
clearly in favour of the bear with broad based selling.
Midcap and Small Cap index witnessed the maximum pain.
On the technical parlance consecutive lower low formation

38

it would be wiser to honor the ongoing trend in the market

and bottoming fishing need to be avoided and the classical
theory denotes that buy on strength should be the ideal
strategy going forward. The swing high of 7250 would be
crucial for Nifty to breach in order to buck the trend.
To sum up according to classical theory of Technical
Analysis the short term trend in the market presently
remains negative with its successive lower low formation
and downward sloping channel line, however it seems that
market might have absorbed the global volatility and
presently awaiting fresh cues from the domestic front in
the form of Union Budget till then Nifty is likely to
continue to consolidate in the rage of 6900-7250.

BUDGET 2016-17

Modern approach in Technical Analysis

On the oscillator front Nifty presently is trading in oversold
price region in both daily and weekly time frame with buy
crossover in RSI. Present formation indicates that upside
potential for the market remains open and higher target of
7500-7600 can be seen as the Index progress towards to
neutral price reading. Other oscillator like ADX is above the
20 level mark in daily and weekly time frame indicating
emergence of fresh trend in the market however +DI is
trading below the DI in both the time frame. Overall
positive to neutral outlook is in the making. MACD too in
the daily time frame turned positive after a prolonged
period with buy crossover, the said indicator turning
positive has confirmed that the short term trend in the

breached while the longer term averages of 200dma in

market to remain positive. To sum up the short term

weekly time frame is honored during the month and

indicators are turning positive for the market which might

provided the necessary pullback. The crucial 200dma

lead to a pullback in the market however medium term

coincides with the downward sloping trendline since March

outlook remains uncertain.

2015 onward at 6950. Inability to sustain above it would

be negatively taken by the market participant and
corrective decline would again ring in. Now the short term
average of 20dma in daily chart initiates resistance around
7300. Hence it can be concluded that Nifty presently is at
a very crucial juncture where an either side directional
move can be expected and the broader range for the
market can be earmarked as 6900 -7300 on the basis of
averages.

Indian VIX
Volatility Index is a measure of market's expectation of
volatility over the near term. Volatility is often described as
the ''rate and magnitude of changes in prices''. An inverse
Nifty again respected the Band Bollinger and took support
from the lower band at around 6950-7000 in both daily
and weekly chart and provided the necessary pullback. The
upper band of the channel is presently burning resistance
around 7300. Thus though it seems that uptrend is in
motion and immediate base for the market at 6950 but
upside might be limited with presence of resistance zone
around 7300. Hence to sum up, the broader range for the
market in the forthcoming month is likely to remain around
6900-7300.

relation seems to exist between Benchmark Index with that

of Indian VIX and Nifty in the preceding month witnessed a
slide followed by a sharp uptick in volatility amidst the
global and domestic uncertainties. Indian VIX which was
initially in the range of 15-18 witnessed a strong spurt as it
went up towards 28 for the first time in 15 months. Rising
volatility has made traders bearish of the current market
condition as many believe rupee could depreciate further
to around 66-67 levels, going forward. Volatility has been
the key aspect of the option premium and hedge position
were created at the initial start of the month with the

Averages define the trend in the market and the present

initiation of long put but at the latter half writing activity

structure in daily time frame truly defines that the trend in

predominated for lower strike price put option followed by

the market is in a serious downtrend. In daily time frame

decrease in Put-call ratio. FII activity for the option contract

both short and long term averages of 20/50/100 are being

a t t h e l a t t e r h a l f of t h e m o n t h i n d i c t e d t h a t t h e

39

MARCH 2016
TECHNICAL REVIEW

institutional investors were hedged to the tune of 2 put for

date. Retracement level from all the time frame conjoins

every call trade initiated. On the technical front Indian VIX

around singular points against which the trading range for

had been taking support from its historical low level and

the market can be identified. The projected retracement

presently resulted in with a decisive pullback. Present price

from the historical correction of 2008 indicates that the

structure indicates that Indian VIX might have bottomed

immediate base for Nifty is stranded till 7270 while the

out and further fall from present level might not be

retracement level of the second and third set of the period

possible. Rise in Indian VIX from present level might act

coincides around 7950-8000. Hence it can be concluded

negatively for Indian equity market.

that Nifty presently is at a crucial juncture and decisive

close above 7250-7270 would invite positive momentum
in the market and can be concluded that Nifty might be in
a bottoming out phase

Gann Theory of Time cycle

The month had been terrible for the Indian stock market as
the benchmark index witnessed a crash of about 6.12%.
This outrage by the bears has caused the talks on the DStreet about a recap of the famous 8-year bear cycle. This
theory of 8-year bear cycle indicates that after every 8 year
markets witness a major correction which is in the range of
20-60% The theory can be aptly applied in Indian markets
as well as we witnessed a hefty correction in the year 1992
followed by a major correction in the year 2000, then in
the year 2008 and now the year 2016 is the next in the
eight year cycle.

Future Projection March 2016

A newer impulse wave were in the making since August
2013, according to the assumption the rally since 5118
constituted the beginning while the high earmarked on
March 2015 ended a 5-wave sequence. Since March 2015
corrective wave takes on its sequence and hence possible
outcomes may be as such. First being the correction since
March 2015 might be the beginning of the larger corrective
wave A-B-C where the low of 7240 ended its final

Retracement principle:

corrective wave 'C' with i-ii-iii-iv-v as sub division and

In order to identify the crucial trend deciding level for the

decisive close above the 61.8% retracement level at 7965

market three different time frames are being identified

would indicate as an end of corrective decline for the

which are as follows. The first being the entire correction

market. Further according to the theory of equality wave 'A'

since January 2008 onward till November 2008, the

equals wave 'C' and hence maximum downside in the

second being the gradual upscale for the Index since

market is limited till 7200. Now Nifty is in a phase where a

December 2011till the high registered in March 2015 and

new set of impulse wave might be in the making

the last being the corrective decline since March 2015 till

considering the crucial support level of 6800 holds.

40

BUDGET 2016-17

Inter-market analysis
U.S Market: DJIA had been is holding strong above its long
term support zone of 15300-15600 levels. The 200 week's
moving average is present at 15900 while the 50 week MA
is placed at 17090. The chart still points to a downside
bias but it is now near a key support level that could finally
get the ball rolling in the other direction. The US Index is
on the verge of bottoming out as a series of technical
indicators indicating limited downside.

credit contagion disappears. But in the long run, this close

partnership won't last. Lower crude oil prices is likely to act
positively as an inverse relation exist between the Indian
equity market with that of crude oil prices as lower oil
prices helps our domestic economy to put a check in trade
balance and narrow down the current account deficit.
10 Year Bond Yield India: India's central bank kept its
policy rate on hold at 6.75% opting to wait until after the
government's annual budget statement at the end February
to decide on whether to cut interest rates further. However

Nymex Crude: Crude oil prices remain static at its

at the day of budget Indian bonds and the rupee rallied

lower level hunting for direction on whether the

after Finance Minister Arun Jaitley said the government

commodity has bottomed out or further downside

would stick to its fiscal deficit target of 3.5 percent of gross

remains. The black gold remained confined within

a tighter range and no imperative changes were noticed on
technical front however it would be wiser to note that the
long term trendline since 1999 onward is breached and the
longer term trend continues to remain negative until and
unless prices sustain above the 35 level mark, no signs of
bottoming out can be marked down. Hence it can be
concluded that the in the forthcoming month too crude oil
prices is likely to remain subdued and the pullback in the
previous month need to sustain above the 35 level mark.
Trend in the commodity remains negative. A weaker global
outlook fears of weak demand for oil leaving the market
with overstock with production still outstripping supply
Recently, whenever price of crude oil drops or rebounds,
the stock market follows closely behind. This strong
positive correlation between oil and the S&P 500 is likely
to continue in the short term. If the price of crude
rebounds, the stock market is also likely to rebound, as the

domestic product for the 2016-17. The street are expecting

that RBI may cut rates even before policy date if things are
favorable as the Governor said earlier that he is awaiting
budget. On the technical front positive structural buildup
might be underway and higher levels can be seen in days
to come.
Indian Rupee: Since May 2014 onward Indian rupee after
bottoming out had been on a serious uptrend and previous
month was of no exception. On technical front, uptrend in
the market remains unabated with it consecutive higher
high formation in both daily and weekly chart. Rising
channel formation in weekly chart indicates room for
further upside remains for the domestic currency
accompanied by bullish Hammer candle in monthly chart.
The rising trendline since August 2011 onward further
validates that downside might be limited. Hence in the
forthcoming month it can be expected that Indian rupee is
likely to depreciate further till 68. The rupee dollar

41

MARCH 2016
TECHNICAL REVIEW

exchange rate has plummeted over 1 per cent in last one

month, as the bears took charge amid the uncertainty over
Fed rate hike and Finance Minister Arun Jaitley's statement
in the Union Budget. Though Rupee rallied on the day of

Negatives:

Multiyear trendline since 2003 is breached.

Oscillator remains negative in both daily and weekly

time frame with oversold price condition.

budget after Finance Minister stuck to its fiscal deficit

target of 3.5 percent of gross domestic product for the

8-year bear cycle theory indicates off an upcoming

major correction in the market.

According to retracement principle inability to surpass

7250 would witness further correction.

According to Elliot wave theory corrective wave

structure A-B-C is likely to extend till 6500-6800

To sum up Indian equity market witnessed a turbulent

month and memories of Jan 2008 and Jan 2011 seems to
have returned and had been haunting the traders after
market observed a sharp crash below 7000 levels. The
recent crash can be attributed due to global rout, poor
quarterly numbers by corporate India, continuous selling
activity by the Institutional players and margin calls getting
triggered. Globally investors seem to have been losing faith
in the ability of their central banks to revive growth.
Negative interest rate policy adopted by ECB and BOJ
clearly conveys that central banks are running out of
ammunition in order to combat deflation. Loose monetary
Positives:

Nifty has retested the lower panel of the downward

sloping channel line.

Lower hairline formation in weekly chart followed by

policies adopted by various central banks during past few

years have failed to yield the desired results. Generally, low
interest rates and quantitative easing should lead to higher
growth and higher inflation. Conversely, the outcome of the
measures has been high debt, low or no growth and

Inside day bar in weekly chart.

making matters worse. Though, minutes from Federal

Lower band of Bollinger providing support from weekly

Reserve's January policy meeting indicated that the central

chart.

bank will likely take time before raising interest rates.

200 wma(weekly moving average) in weekly chart is

initiating support at 6900

Global equity markets are now trading with high correlation

to crude prices. Falling crude price reflects the slowdown in
global economy. Many economies are dependent on crude

Indian VIX witnessing signs of cool-off.

price and with crude price tumbling, their financials have

200 week's moving average is present at 15900 for

been severely impacted. This has increased the risk of few

DJIA

Outlook remains negative for Crude oil if 35 level mark

is not scaled.

countries defaulting which is a major risk to global

economy. Coming back to our domestic market, India's
corporate season was in full swing but the results have
been poor across majority of the segments. PSU banks have
reported huge NPA accretions post the RBI's directive to

42

BUDGET 2016-17

disclose stressed assets which has resulted in sharp spike

panic lows near its 200-WMA with RSI placed at 30. Some

in NPA levels. Post the reported loss and significant NPA

amount of respite is seen from such price structure and

accretion, PSU bank's tier 1 ratio is severely impacted. On

makes an attempt towards its swing high. However the

macro front, CPI climbed to 5.69% in January while

theory of 8-year bear cycle had been at the back of traders

monthly WPI stood at -0.9% in January and IIP for the

mind witnessing a correction to the extent of 20-60% as

month of December contracted to 1.3%.

On the technical front Bears have been dominating the
global markets since the start of 2016 based on the
present price structure Nifty is likely to remain in corrective
phase and trade in the range of 6800-7350 levels. The
broader trend in the market continues to remain down and
interesting to note that the classical definition of a bear
market is a drop of 20% or more from the recent peak
however if the 20% downturn lasts less than 2 months it is
considered as a correction instead of a bear mark so,
considering the ongoing correction since March 2015
(9119-6869) 24% correction is already in place which has
every reason to gauge fear in traders mind of an upcoming
bear market. The ongoing downward sloping channel line
since March 2015 onward indicates that Nifty now has
retested the negative extreme hence odd are high with a
medium term perspective that would favor the bulls.
Further support from the 200dma in weekly chart still
remains. Market tends to move in cycles. As seen earlier in
2011, 2012 and 2013, also during the current corrective
phase, it has been seen that Nifty usually tends to make

we have seen in the year 1992 followed by 2000, then in

2008 and now in 2016 being the next eight year cycle. The
medium term trend is clearly down however; post budget
the low of 6826 indicates that the pain is not over yet
even the price and time similarity the correction witnessed
in the year 2011 indicates the same where the previous 13
month of correction was to the tune of 28% while the
present correction is of 11 months duration with 24%
correction till date. Even other correlated market too are at
a threshold level either way direction movement can be
expected. Going ahead in the forthcoming month due to
confluence of key supply zone present between 72407350 and absence of a higher low formation, market may
move sideways to negative in the forthcoming month. The
derivative data too depicts the same where Nifty rollover
was at 68%, almost in line to 3-month average of 71%.
The cost of rollover were seen around 25 basis points,
which suggest that traders are aggressively rolling their
short positions to next month as technically markets are
more favoring the bears . The market-wide rollovers were at
79% compared to average three series rollover of 78%.

43

MARCH 2016
MARKET DIARY

27.01.2016
1

EICHERMOT

VEDL

29.02.2016

27.01.2016

29.02.2016

16232.10

18900.60

16.44%

BHEL

139.60

90.85

-34.92%

63.80

70.60

10.66%

CROMPGREAV

172.95

129.90

-24.89%

HINDUNILVR

767.90

830.40

8.14%

PNB

SRTRANSFIN

747.25

805.55

7.80%

MARUTI

93.75

71.00

-24.27%

4111.95

3236.50

-21.29%

43.60

34.90

-19.95%

237.30

190.05

-19.91%

BHARTIARTL

297.80

315.50

5.94%

SAIL

EXIDEIND

121.30

127.85

5.40%

ICICIBANK

APOLLOHOSP

1392.00

1463.85

5.16%

IBULHSGFIN

704.05

575.35

-18.28%

M&M

1176.70

1228.10

4.37%

AUROPHARMA

801.30

655.65

-18.18%

2649.65

2756.25

4.02%

RCOM

63.00

51.75

-17.86%

821.15

853.90

3.99%

10

UNIONBANK

130.15

106.95

-17.83%

1689.15

1754.55

3.87%

11

ABIRLANUVO

863.00

712.35

-17.46%

BRITANNIA

10

SUNPHARMA

11

LUPIN

12

UBL

13

GODREJCP

14

M&MFIN

15

MCDOWELL-N

16

COALINDIA

17

DRREDDY

18

NMDC

19

YESBANK

773.95

802.95

3.75%

12

TECHM

1146.80

1188.35

3.62%

13

DIVISLAB

503.05

415.55

-17.39%

1144.20

950.55

-16.92%

199.05

206.15

3.57%

14

NTPC

143.75

119.50

-16.87%

2586.75

2650.65

2.47%

15

TATAGLOBAL

124.45

103.55

-16.79%

304.05

311.00

2.29%

16

CANBK

190.15

158.45

-16.67%

2973.00

3036.25

2.13%

17

RECLTD

187.00

155.90

-16.63%
-16.45%

80.10

81.40

1.62%

18

BANKINDIA

678.05

689.00

1.61%

19

GAIL

20

BAJAJFINSV

99.70

83.30

358.30

305.15

-14.83%

1892.55

1611.90

-14.83%

Indices Performance 27.01.2016 29.02.2016

Sector Indices Monthly Return (%)
-

0%
-0.4%
-2%
-2.0%
-4%

-3.8%

-6%

-5.5%

-5.6%
-6.4%
-7.1%

-8%

-9.0%

-10%

-9.1%
-10.4%

-12%
-12.1%

-12.6%

-14%
METAL
Source: BSE

44

FMCG

HC

TECk

AUTO

IT

CD

CG

OIL&GAS BANKEX POWER REALTY

BUDGET 2016-17

Beware of little expenses. A small leak will sink a whole ship.

-Benjamin Franklin

GOLD

main reason of India's current account deficit and because

At the beginning of 2016, market was expecting that Gold

global crude oil price dipped much, Indian jewelry industry

would again start downside move after a brief pause in the

is expecting that government may slash the import duty in

last quarter of 2015. Contrary to belief gold is now most

gold. The 80:20 rule on gold imports was withdrawn in

precious after scoring highest return among riskier

2014 and the gold industry has been lobbying for the

investment asset classes. Globally gold has beaten all the

import duty cut since then.

asset classes this year by generating 15% return. SPDR

But for the month gold was much volatile as FED official's

Gold Trust, the largest gold backed ETF alone add 30

contradictory statements made it much difficult to gauge

tonnes of physical gold in last month itself. Though in

future path of US interest rate. In the mid of the month FED

India, there is no evidence of demand pick up as market is

chief Janet Yellen testifying before congress and largely

waiting consciously for import duty cut in the budget. In

suggesting that 2016 rate hikes were on track, but after

2013 central government of India increased the import

that suggested that negative interest rate had been

duty in gold from 4% to 10% to curb the domestic

analyzed and discussed. Market also started believing that

consumption of the gold. Gold consumption is seen as the

FOMC is preparing market for rate easing in near term.

Weekly Chart: Gold In US Dollar

45

MARCH 2016
COMMODITY MONTHLY ROUND-UP

Largely we can say that this may be a verbal intervention

February'2016 gold for the first time breached 100 weekly

from FED after US Dollar Index is near multi year high and

SMA and for last two weeks holding well above that SMA,

US export industries are affected by the strength.

weekly MACD is also breached the 0 line and entering into

Major global investment banker Goldman Sachs is still

positive territory after 2013, Long term trend line which

maintaining its bearish view on gold and expecting that

was guarding any upside advancement of the market is

within 3 months the price may come down to $1100 and

also taken out by the latest move.

for the next 12 months the target will be anywhere around

Our advise for the traders is to open long position if

$1000/oz. They are assuming that current turmoil is

market break above $1264 which is the immediate high of

overblown and chances of systematic risk coming from

the market and place stop at $1220. Initial target will be

slowing growth in China and negative interest rate are

anywhere near $1304 and then around $1340. Bulls

somewhat not exist.

should be cautious if market fall below $1163.

Technical Analysis
From the low of $250 to the historical high of $1920,

JAPANESE YEN

currently market is at 50% retracement level. Technical

Dollar/Yen currency pair is one of the most volatile pair in

Analysis theory said that 50% level is important as in

that specific class for last six months. The yen witnessed

many cases market resumes its journey after touching 50%

heavy appreciation after PBoC announced its currency

retracement level.

devaluation which is contrary to its Asian peers which

Another few important things that can be witnessed in the

witnessed depreciation. Yen withstood that shock and

weekly chart of Gold are, from mid of 2013 to

proved to be safe heaven vehicle.

Weekly Chart: USD-JPY Spot Chart

46

BUDGET 2016-17

When Bank Of Japan decreased the deposit rate of new

Technical Analysis

deposits in negative territory to weaken the currency

Weekly chart of the pair showed us one classical Head &

further, Yen depreciated a bit at that time but no slide was

Shoulder setup and that's too at the market top. The setup

expected. Japanese central bank's move is to depreciate

has a neckline around 115.60 which was knocked out by

the currency further and infuse more liquidity into the

the market on first week of February itself. The setup has a

financial system which fears negative inflation rate. Like

target of 107.80. The week market breached the neckline,

every developed economies Japan also have target of 2%

touched the low near 110.99 in spot market. If participants

inflation rate but current data is showing that for whole of

missed the opportunity, it's better for them to wait for a

the year the rate could be around 1.4% and may drop

bounce back towards 113-114 and then re-entering with

below 1% mark. Bank Of Japan is already pumping almost

fresh shorts. The stop should be place at 115.01 which is

$50Billion each month into its financial system to boost

the high of the latest swing in the daily chart. The

the inflation and even promised more actions are waiting

bearishness of the market can be again reconfirmed by its

to fight against subdued inflation number.

weekly closing which is below 100 Weekly SMA.

The recent strong bounce in the pair can be attributed by

Weekly MACD is under 0 line which is marking its bearish

strong economic indication from current account figure,

nature. Weekly RSI is just above 30 mark which is

dovish statements from US FED regarding future rate hike

reconfirming bearishness and chance of continuation of the

path and includes current equity market turmoil which is

trend is quite high. Only a weekly close above 115.01 level

boosting the demand for safe heaven asset class.

may prompt some short covering.

47

48

UK: Nationwide House PX MoM

US: Personal Income
US: Personal Spending
US: Pending Home Sales MoM
US: Markit US Services PMI

28

US: Existing Home Sales

US: Chicago Fed Nat Activity Index
UK: Rightmove House Prices MoM
EC: ECB Current Account SA

21

IN: Industrial Production YoY

JN: Machine Orders MoM
IN: Wholesale Prices YoY
EC: Industrial Production SA MoM
IN: CPI YoY

14

JN: Leading Index CI

CH: Foreign Reserves

JN: Jobless Rate

US: Consumer Confidence Index
JN: Job-To-Applicant Ratio
JN: Retail Sales MoM
US: S&P/CaseShiller 20-City Index NSA

29

UK: CPI YoY

JN: All Industry Activity Index MoM
UK: PPI Output NSA MoM
UK: RPI MoM
US: Richmond Fed Manufact. Index

22

JN: Industrial Production MoM

US: Retail Sales Advance MoM
JN: Tertiary Industry Index MoM
US: PPI Final Demand MoM
US: Empire Manufacturing

15

JN: GDP SA QoQ

JN: BoP Current Account Balance
EC: GDP SA QoQ
CH: Trade Balance
US: NFIB Small Business Optimism

JN: Jobless Rate

US: ISM Manufacturing
CH: Caixin China PMI Mfg
JN: Nikkei Japan PMI Mfg
IN: Nikkei India PMI Mfg

JN: Industrial Production MoM

US: MBA Mortgage Applications
EC: Consumer Confidence
US: ADP Employment Change
EC: Economic Confidence

30

US: MBA Mortgage Applications

US: New Home Sales
EC: Consumer Confidence

23

US: FOMC Rate Decision (Upper Bound)

US: CPI MoM
UK: Jobless Claims Change
US: MBA Mortgage Applications
US: Housing Starts

16

US: MBA Mortgage Applications

UK: Industrial Production MoM
UK: Manufacturing Production MoM
US: Wholesale Inventories MoM
JN: Machine Tool Orders YoY

US: MBA Mortgage Applications

US: ADP Employment Change
JN: Monetary Base YoY
UK: Markit/CIPS UK Construction PMI
EC: PPI MoM

MARCH 2016
3

US: Initial Jobless Claims

UK: GDP QoQ
UK: Mortgage Approvals
US: Chicago Purchasing Manager
US: Continuing Claims

31

US: Initial Jobless Claims

US: Durable Goods Orders
JN: Nikkei Japan PMI Mfg
EC: Markit Eurozone Manufacturing PMI
US: Markit US Manufacturing PMI

24

UK: Bank of England Bank Rate

US: Initial Jobless Claims
EC: CPI YoY
US: Leading Index
US: Philadelphia Fed Business Outlook

17

US: Initial Jobless Claims

EC: ECB Main Refinancing Rate
CH: CPI YoY
JN: PPI YoY
IN: Exports YoY

10

US: Initial Jobless Claims

US: Durable Goods Orders
UK: Nationwide House PX MoM
US: Factory Orders
EC: Markit Eurozone Composite PMI

US: GDP Annualized QoQ

JN: Natl CPI YoY
JN: Tokyo CPI YoY
US: Personal Consumption
US: Core PCE QoQ

25

US: U. of Mich. Sentiment

18

US: Import Price Index MoM

US: Monthly Budget Statement
UK: Trade Balance
JN: BSI Large All Industry QoQ

11

US: Change in Nonfarm Payrolls

US: Unemployment Rate
US: Trade Balance
US: Change in Manufact. Payrolls
EC: Markit Eurozone Retail PMI

MARCH 2016
WORLD ECONOMIC EVENT CALENDAR - MARCH 2016

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