February 2017

Budget 2017 -18

Status

quo

Relief

LTCG

DDT

Farm loan

Waiver

Fiscal deficit

breach

MSME

Tax cut

Afforadable

housing

MGNREGA

Personal income

tax cut

Anxiety gives way to relief

Research Team

(Gautam.Duggad@MotilalOswal.com)

Nikhil Gupta

(Nikhil.Gupta@motilaloswal.com)

Union Budget FY17-18

Contents

Summary .............................................................................................................................. 3

Sectoral Impact ................................................................................................................... 12

Automobiles ................................................................................................ 13

Aviation ....................................................................................................... 15

Capital Goods/Infra ..................................................................................... 16

Cement ........................................................................................................ 18

Consumer .................................................................................................... 19

Financials ..................................................................................................... 21

Metals/Mining ............................................................................................. 23

Oil & Gas...................................................................................................... 24

Real Estate ................................................................................................... 25

Technology/E-Commerce............................................................................. 26

Telecom ....................................................................................................... 28

Utilities ........................................................................................................ 29

Others (Midcaps) ......................................................................................... 30

Ready reckoner................................................................................................................... 32

Investors are advised to refer through important disclosures made at the last page of the Research Report.

Motilal Oswal research is available on www.motilaloswal.com/Institutional-Equities, Bloomberg, Thomson Reuters, Factset and S&P Capital.

2 February 2017

2

Union Budget FY17-18

Union Budget 2017-18: Realistic numbers add credibility

Achieving maximum impact at minimum cost

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The government pegs FY18 fiscal deficit target at 3.2% of GDP, lower than

3.5% for FY17, but slightly higher than the self-committed target of 3% of GDP.

Since primary deficit and debt-to-GDP ratio are likely to narrow next year, we

do not find a breach in the deficit target concerning.

It is notable that the government has budgeted realistic to conservative

growth in tax collection and avoided inclusion of any windfall receipts from

the potential extinguishment of RBI’s liabilities due to demonetization, which

lends credibility to its receipts estimates. The disinvestment target of INR725b,

however, still looks ambitious.

It was heartening to see the government resisting calls for populist measures.

Total spending is budgeted to grow at 6.6%, implying that spending will fall to

12.7% of GDP, marking the lowest level since mid-1970s. Further, with the

share of capital spending rising to a decade high of 14.4%, the spending quality

is also good.

Overall, we believe that the government has tried to make the maximum

impact at minimum cost by providing relief to the low-income individual tax

payers and reducing corporate tax for small companies – the most affected

sections of the society. The government has kept inflationary bias at bay and

its realistic math adds to its credibility.

We also believe that a credible and economy-sensitive Budget opens the room

for the RBI to deliver a rate cut next month.

Market strategy

The FY18 Union Budget was presented at a time of mounting uncertainties on both

the global and domestic fronts. With demonetization temporarily disrupting the

business environment and moderating economic growth, the market was expecting

the government to respond with a dose of populism (cut in tax rates, rural packages,

rise in tax deduction limits, etc.) in the budget. At the same time, anxiety was high

around factors like LTCG and service tax hike. Against this backdrop, we believe the

finance minister (FM) in his third budget has managed to achieve a fine balance

without deviating from the fiscal prudence path. As expected, the budget had

measures to clamp down on black money (ban on cash transactions beyond INR3

lakh) and promote digitization. The FM provided relief to the low-income individual

taxpayers and reduced corporate tax for small companies – the segments most

impacted by demonetization, in our view. Given the context of muted private capex

investment cycle, the onus of driving investment rests on the government. Thus, the

FM is budgeting for another year of double-digit (10.7%) capex growth in FY18, with

higher allocation toward Roads, Railways, Rural Housing, Affordable Housing,

Agriculture, Social sector, etc. Despite this, the government has pegged total

spending growth at 6.6% for FY18 – the lowest in the last 12 years. This is achieved

by containing revenue expenditure and keeping inflationary forces at bay. This, we

believe, opens the window for one more rate cut by the RBI.

Top ideas:

ICICI Bank, SBI, IOC, Tata Motors, ITC. Stocks to play the Housing and

Infra focus are L&T, UltraTech and Repco Finance. We remain Underweight on Tech,

Healthcare and Consumer Staples.

2 February 2017

3

Union Budget FY17-18

Overall, we find the 2017-

18 Union Budget extremely

credible and high in quality,

which is, delightfully,

unaffected by upcoming

state elections.

3% deficit target postponed yet again by one year…

The government pegs FY18 fiscal deficit at 3.2% of GDP, deviating from its self-

committed target of 3%

(Exhibit 1).

Importantly, not only has the government boldly

avoided resorting to any populist measures, keeping inflationary bias at bay, realistic

budget math also adds to its credibility (barring an ambitious disinvestment target,

as always). Moreover, the government has also managed to meet the honest

taxpayers’ expectations by tweaking tax structure, marginally. Overall, we find the

2017-18 Union Budget extremely credible and high in quality, which is, delightfully,

unaffected by upcoming state elections. This gives us confidence that the central

government is unlikely to take unreasonable steps to boost short-term growth.

Fiscal deficit (INR b)

Fiscal deficit (% of GDP)

6.0

4.3

3.9

4.0

6.5

4.8

3.3

2.5

5.9

4.9

4.5

4.1

3.9

3.5

Exhibit 1: Trends in fiscal deficit in the past two decades

6.3

5.2

5.5

6.0

5.7

3.2

Source: Government, MOSL

…but, we do not find this particularly concerning





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

It is also important to note that though the deficit target is higher than the

committed 3% target (which

we expected the government to honor),

we do not

find this particularly concerning because of three key reasons.

First, it will be the lowest deficit in a decade and second-lowest in the post-

liberalized Indian economy since the 1990s.

Second, primary deficit (fiscal deficit excluding interest payments) is estimated

to narrow further from 0.3% of GDP in FY17 to 0.1% of GDP in FY18. Effectively,

it implies that the entire fiscal deficit is on account of interest payments

(Exhibit

2).

Finally, debt-to-GDP ratio is likely to fall from 39.4% in FY17 to 38.1% in FY18

(Exhibit 3).

2 February 2017

4

Union Budget FY17-18

Exhibit 2: Almost balanced primary deficit targeted for FY18

Primary Deficit

Interest Payments

Fiscal Deficit

Exhibit 3: Debt-to-GDP ratio anticipated to narrow further

53.5

48.5 51.4

Debt-to-GDP ratio

38.9

46.8

42.7 45.0

36.6 39.5 38.1

3.4

3.3

3.0

3.1

3.1

2.8

1.8

3.3

1.1

3.2

0.9

3.3

0.6

3.2

0.3

3.1

0.1

2.6

3.2

1.8

Source: Government, MOSL

Source: Government, MOSL

Small savings to help reduce market borrowings for FY18

Fiscal deficit for FY18 is pegged at INR5,465t (3.2% of GDP), following revised

estimate (RE) of INR5,343t (3.5% of GDP) deficit in FY17 (unchanged from the

budget estimates (BE)). More importantly, however, the government has pegged

net market borrowings at INR3.5t (2.1% of GDP) for FY18. Notably, for FY17,

government net market borrowings were revised down significantly from INR4.41t

(2.9% of GDP) to INR3.65t (2.4% of GDP). Consequently, the borrowings target for

FY18 is not dramatically different from FY17. Gross borrowings are also unchanged

at INR5.8t

(Exhibit 4).

The share of net market

borrowings is expected to

fall from 85% in FY16 to

64% in FY18

One of the key reasons for lower-than-budgeted net borrowings in FY17 was

unprecedented inflows in small savings, which helped to finance the government’s

fiscal deficit. As

exhibit 5

below shows, small savings financed ~17% of fiscal deficit

in FY17 (as per RE), as against BE of 4%. This helped to reduce the need to borrow

funds from the market. For FY18 also, the government believes small savings could

finance ~18% of fiscal deficit, and thus, the share of net market borrowings is

expected to fall from 85% in FY16 to 64% in FY18.

Exhibit 4: Key fiscal indicators from Union Budget 2017-18

Economic indicators

Gross fiscal deficit

Gross market borrowings

Net market borrowings

Nominal GDP

Unit

INR b

% of GDP

INR b

% of GDP

INR b

% of GDP

INR b

% YoY

FY15

5,107

4.1

5,920

4.7

4,532

3.6

124,882

10.8

FY16

5,351

3.9

5,850

4.3

4,547

3.3

135,761

8.7

FY17BE

5,339

3.5

6,000

3.9

4,418

2.9

150,695

11.0

FY17RE

5,343

3.5

5,820

3.9

3,658

2.4

150,754

11.0

FY18BE

5,465

3.2

5,800

3.4

3,502

2.1

168,475

11.8

Source: Union Budget documents, MOSL

2 February 2017

5

Union Budget FY17-18

Exhibit 5: Financing of fiscal deficit

Net market borrowings

FY18BE

FY17RE

FY17BE

FY16

-3

Securities in small savings

3,502

3,658

4,418

4,547

External debt

Drawdown of cash balance

1,002

904

128

158

149

221

Others

675

402 229

577

132

127

132

191

525

Source: Union Budget documents, MOSL

Government provides limited stimulus to the economy

Provides marginal relief to low-income individuals…:

In contrast to the market

expectation of increasing the income tax slab exemption limit and expanding the tax

deduction limit under Section 80C, the government only cut the tax rate for

individuals earning between INR250,000 and INR500,000 per annum from 10% to

5%. This only change in individual tax structure, which will benefit low-income

individuals paying taxes, is estimated to cost the exchequer INR155b. To finance a

portion of this cost, the government has introduced an additional 10% surcharge on

individuals earning INR5m-10m per annum (expected to garner INR27b). The

existing surcharge of 15% on people earning more than INR10m will continue.

…and significant relief to MSMEs:

Though the government resisted any blanket

reduction in the corporate tax rate, it announced a reduction for smaller companies

(with annual turnover of up to INR500m) by 5 percentage points to 25%. As per the

government’s data, almost 96% of companies (667,000) filing taxes will benefit. It is

expected to cost the exchequer INR72b per annum.

Exhibit 6: Tale of regressive corporate tax structure

(Profit before taxes)

All companies

>5bn

1-5bn

500-1,000mn

100-500mn

10-100mn

0-10mn

25.90

28.57

28.47

29.00

29.44

30.26

Source: Union Budget documents, MOSL

Effective tax rate (%)

28.24

2 February 2017

6

Union Budget FY17-18

Government boldly avoids inflationary spending

the government has

targeted the entire little

stimulus to low-income

individuals and small

companies, which could

have been hit the worst due

to the disruptions created

by demonetization

Finally, it was refreshing to see the government avoiding any populist spending,

helping to keep inflationary fears at bay. Although the allocation under MGNREGA

was increased to an all-time high of INR480b for FY18, it is only 1% higher than

INR475b allocated (revised up from BE of INR385b) in FY17.

Maximum impact at minimum cost

Overall, it is interesting to note that the government has targeted the entire little

stimulus to low-income individuals and small companies, which could have been hit

the worst due to the disruptions created by demonetization in the past three

months.

FY17BE

INR b

% of GDP

14,442

9.6

13,770

9.1

16,309

10.8

10,541

7.0

8,471

5.6

4,939

3.3

3,532

2.3

7,838

5.2

2,300

1.5

3,187

2.1

2,310

1.5

3,229

2.1

671

0.4

565

0.4

19,781

13.1

17,276

11.5

17,310

11.5

4,927

3.3

1,532

1.0

2,504

1.7

1,234

0.8

1,979

1.3

5,134

3.4

2,470

1.6

5,339

3.5

3,540

2.3

150,651

FY17RE

% YoY

16.7

19.1

17.0

15.4

14.3

9.0

22.8

19.8

3.2

34.5

17.1

33.2

-22.5

8.0

12.5

15.1

12.8

9.4

4.7

-2.9

32.4

18.5

22.0

10.6

FY18BE

% YoY

8.1

6.5

12.2

12.7

15.7

9.1

24.9

8.8

12.9

5.0

11.1

-13.7

49.2

59.3

6.6

7.0

5.9

8.3

6.0

3.4

2.4

5.4

5.9

10.7

Exhibit 7: Union Budget 2017-18 in numbers

FY16A

INR b

Total Receipts

12,680

Revenue receipts

11,950

Gross Taxes

14,556

Net Taxes

9,438

Direct taxes

7,409

Corporation Taxes

4,532

Income Taxes

2,876

Indirect taxes

7,148

Customs

2,103

Excise Duties

2,881

Services tax

2,114

Non-tax revenue

2,513

Non-debt capital receipts

730

Divestment

421

Total Expenditure

17,908

Total excl. Subsidies

15,330

Revenue expenditure

15,378

Interest payments

4,417

Defense

1,506

Subsidies

2,578

Pensions

968

Pay & allowances*

1,654

Other

4,255

Capital expenditure

2,530

Fiscal Deficit

5,228

Revenue Deficit

3,427

Nominal GDP

135,761

*Include defense pay & allowances also

INR b

14,801

14,236

17,032

10,888

8,471

4,939

3,532

8,561

2,170

3,874

2,475

3,348

566

455

20,144

17,640

17,346

4,831

1,577

2,504

1,282

1,961

5,190

2,798

5,343

3,110

150,754

INR b

% of GDP

16,002

9.5

15,158

9.0

19,116

11.3

12,270

7.3

9,800

5.8

5,387

3.2

4,413

2.6

9,316

5.5

2,450

1.5

4,069

2.4

2,750

1.6

2,888

1.7

844

0.5

725

0.4

21,467

12.7

18,877

11.2

18,369

10.9

5,231

3.1

1,673

1.0

2,590

1.5

1,312

0.8

2,068

1.2

5,496

3.3

3,098

1.8

5,465

3.2

3,212

1.9

11.0

168,475

11.8

Source: Union Budget documents, MOSL

% of GDP

9.8

9.4

11.3

7.2

5.6

3.3

2.3

5.7

1.4

2.6

1.6

2.2

0.4

0.3

13.4

11.7

11.5

3.2

1.0

1.7

0.9

1.3

3.4

1.9

3.5

2.1

Realistic-to-conservative receipt estimates

The government expects total actual receipts (excluding debt receipts) to increase

from INR14.8t in FY17 (as per RE) to INR16t next year, implying a deceleration in

growth from 16.7% in FY17RE to ~8% in FY18

(Exhibit 8).

The primary reason for

lower growth in actual receipts is an expected decline of 13.7% in non-tax revenue

receipts, due to which the share of non-tax receipts is expected to fall from 23% this

year to 18% in FY18

(Exhibit 9).

2 February 2017

7

Union Budget FY17-18

Exhibit 8: Total actual receipts expected to grow slowly in

FY18…

Actual receipts (% of GDP)

35.9

10.8

(6.6)

16.7 14.8

(4.3)

16.7

8.1

Actual receipts (% YoY)

Exhibit 9: …primarily due to a decline in non-tax revenue

receipts

Net taxes

18

19

27

Non-tax revenue

15

15

19

Non-debt capital

17

20

23

18

9.1

10.0

82

80

69

80

81

77

78

74

74

77

Source: Government, MOSL

Source: Government, MOSL

Government pegs FY18 (net) tax growth at 12.7%…

Interestingly, the government seems to have avoided complications by excluding the

impact of Goods & Services Tax (GST) on tax collections. After witnessing excellent

growth of ~17% for two consecutive years, the government expects gross taxes to

grow at a decent 12.2% in FY18. It implies that gross taxes would be stagnant at

11.3% of GDP in FY18

(Exhibit 10).

After adjusting gross taxes by the devolution to

states, net tax receipts rate are expected to grow 12.4% in FY18 (v/s 15.4% in FY17),

improving only marginally from 7.2% of GDP to 7.3% next year.

the share of individual taxes

will increase from 21% of

gross taxes to 23% in FY18,

while the share of almost all

other taxes will fall

marginally

Further details show that direct taxes are expected to grow faster than indirect

taxes in FY18, primarily because of ~25% growth estimated in personal income

taxes. Consequently, the share of individual taxes will increase from 21% of gross

taxes to 23% in FY18, while the share of almost all other taxes will fall marginally

(Exhibit 11).

Exhibit 11: Personal income taxes expected to continue

growing (% of gross taxes)

Corporate

Union Excise

10

18

17

18

35

9

16

13

20

39

9

17

17

18

38

11

16

17

18

36

Personal Income

Services

13

17

16

19

34

14

15

15

21

35

13

15

15

21

34

Customs

15

20

14

20

31

15

23

13

21

29

14

21

13

23

28

Exhibit 10: Tax-to-GDP ratio expected to remain stagnant

after rising for two successive years (% of GDP)

Net Tax

10.8

9.6

10.2

10.2

10.4

Gross Tax

10.7

10.1 10.0

11.3 11.3

Source: Government, MOSL

Source: Government, MOSL

…and has ignored any special dividends from RBI…

What is also important to note is that the government appears to have chosen NOT

to include any windfall gains arising from the extinguishing of RBI’s (Reserve Bank of

India) liability due to demonetization. The Budget pegs total collection from

‘dividends/surplus of RBI, nationalized banks & financial institutions’ to fall

marginally from INR762b in FY17 to INR749b in FY18. Further, receipts from

2 February 2017

8

Union Budget FY17-18

telecommunications are also estimated at INR443b as against INR787b in FY17RE

(v/s INR999b FY17BE). Consequently, as we mentioned above, non-tax revenue

receipts are expected to decline 13.7% in FY18.

we believe even if the

government fails to achieve

its FY18 disinvestment

target, the shortfall could

be made up by better

collections elsewhere.

…but disinvestment target still unrealistic and ambitious

Although the majority of receipts appear to be realistic-to-conservative, the

disinvestment target of INR615b (and another INR110b from listing of insurance

companies) appears ambitious. Nevertheless, we believe even if the government

fails to achieve its FY18 disinvestment target, the shortfall could be made up by

better collections elsewhere.

Exhibit 13: Disinvestment target for FY18BE looks ambitious,

as always (INR b)

725

455

Exhibit 12: Key components of non-tax revenue receipts (%

of total non-tax revenue receipts, (% YoY))

Interest receipts

Others

Dividents & Profits

Non-Tax revenue (RHS)

50

38

42

17

FY12

43

41

41

44

48

43

25

246

0

6

228

181

259

294

377

421

39

15

FY13

45

11

FY14

45

12

FY15

45

10

FY16

46

49

-25

-50

7

5

FY17RE FY18BE

Source: Government, MOSL

Source: Government, MOSL

Spending is budgeted to fall

from 13.4% of GDP in

FY17RE to 12.7% in FY18,

the lowest since the mid-

1970s

Total spending as percentage of GDP at lowest level since mid-1970s…

The government has pegged a growth of 6.6% in total spending for FY18 – the

lowest growth in 12 years. Consequently, spending is budgeted to fall from 13.4% of

GDP in FY17RE to 12.7% in FY18, the lowest since the mid-1970s

(Exhibit 14).

Since

government consumption expenditure – reflected by revenue expenditure (revex) –

is the largest contributor to GDP growth this year, lower spending growth in FY18

might make it difficult for the economy to achieve higher GDP growth next year,

unless private sector picks up. It is also important to note that the government

increased its capital expenditure (capex) by 10.6% this year (better than FY17BE of

4% growth) and proposes to grow capex similarly next year also. Lower growth in

revex implies that the share of capex will increase to 14.4% of total spending – a

decadal high

(Exhibit 15).

2 February 2017

9

Union Budget FY17-18

Exhibit 14: Total spending set to fall to its lowest level since

FY76 (% of GDP)

20

18

15

13

10

Total Spending

Exhibit 15: Share of revenue and capital pending in total

expenditure of government

Revex

Capex

10.2 11.0 13.1 12.2 11.8 12.0 11.8 14.1 13.9 14.4

89.8 89.0 86.9 87.8 88.2 88.0 88.2 85.9 86.1 85.6

Source: Government, MOSL

Source: Government, MOSL

Revex is estimated to fall to

10.9% of GDP next year,

marking the lowest level in

33 years

…due to limited growth in revenue spending

Since revex accounts for more than 85% of total fiscal spending, it is natural that

lower spending growth was attributable to lower growth in revex. The government

estimates a growth of only 5.9% in revex as against 12.8% growth in FY17RE.

Notably, revex is estimated to fall to 10.9% of GDP next year, marking the lowest

level in 33 years. Total outlays excluding subsidies at 11.2% will be the lowest in the

past five decades since when we have the series available. A look at various

components

(Exhibit 17)

of revex reveals that core revex (excluding interest

payments) is proposed to grow ~5% next year, implying that it will fall to 7.8% of

GDP in FY18 as against 8.3% this year. Further, pension is expected to grow 2.4%

next year, following a growth of 32.4% in FY17 and pay & allowances (including

defense) is anticipated to grow 5.4% as against 18.5% this year.

One of the questionable assumptions, however, is the allocation of INR250b on

account of petroleum subsidies based on global crude oil price of USD52/barrel for

FY18. Our oil analyst believes that oil price could be close to USD60/barrel, implying

subsidies of about INR400b.

Exhibit 16: Change in revenue expenditure (revex)

33.5

Revex (% YoY)

Exhibit 17: Key component of revenue expenditure

FY17RE

INR b

20,144

17,640

17,346

4,831

1,577

2,504

1,282

1,961

5,190

2,798

INR b

21,467

18,877

18,369

5,231

1,673

2,590

1,312

2,068

5,496

3,098

FY18BE

% YoY % of GDP

6.6

12.7

7.0

11.2

5.9

10.9

8.3

3.1

6.0

1.0

3.4

1.5

2.4

0.8

5.4

1.2

5.9

3.3

10.7

1.8

14.1

14.9

10.1 8.5 10.3

6.9

12.8

4.8

5.9

Total Expenditure

Total excl Subsidies

Revenue expenditure

Interest payments

Defense

Subsidies

Pensions

Pay & allowances

Other

Capital expenditure

Source: Government, MOSL

Source: Government, MOSL

2 February 2017

10

Union Budget FY17-18

Government provides limited push to infrastructure

Finally, the government has proposed to increase its capex by 10.7% for the second

consecutive year in FY18. Importantly, it has revised its capex growth for FY17 from

BE of ~4% to RE of 10.6%, and thus, FY18 growth looks good with higher base.

Exhibit 18: Capital expenditure (capex)

Capex (% of GDP)

39.0

25.0

1.3

(23.7)

5.2

12.5

4.8

Capex (% YoY)

28.6

10.6

10.7

Source: Government, MOSL

The fact that total spending

as percentage of GDP is at

the lowest level since mid-

1970s and revex (as % of

GDP) is the lowest in 33

years confirms the

government’s commitment

to keep inflationary forces

away

Overall, we believe that the government has tried to make the maximum impact at

minimum cost. Not only has it resisted the call for increasing the income tax

exemption slab and expanding the 80C limit, it has also avoided changing the

corporate tax rate for larger companies. However, by giving relief to the low-income

individual tax payers and reducing corporate tax for small companies, the

government may have helped the most affected sections of the society. Finally, the

fact that total spending as percentage of GDP is at the lowest level since mid-1970s

and revex (as % of GDP) is the lowest in 33 years confirms the government’s

commitment to keep inflationary forces away. This, we believe, opens the room for

the RBI to deliver a rate cut next week.

2 February 2017

11

Union Budget FY17-18

Sectoral Impact

Exhibit 19: Budget 2017 has been largely non-event for most of the sectors

Sector

Automobiles

Key Highlights

Reduction in income tax rate for assesses having income between ~INR250k-500k

Impact

Positive

Page No.

13

Aviation

Capital Goods/Infra

Higher allocation to Agri/rural will benefit 2Ws & PVs, while higher infra allocation will

benefit tipper (CV) demand

Exemption of service tax under promotion of Regional Connectivity Services

Positive

Focus on infrastructure has continued with a) Rail capex planned at INR1.31t (+8% YoY)

Neutral

with budgetary allocation increased from INR462b (FY17RE) to INR550b (+19% YoY). Road

capex planned at INR1.24t in FY18E (+11% YoY) over FY17RE of INR1.11t, driven by

increase in budgetary support to INR649b (+24% YoY over FY17RE of INR524b).

Increased allocation to affordable housing through Pradhan Mantri Awas Yojna (PMAY) by

Positive

53% YoY

Upsurge in spending towards infrastructure through National Highway Authority of India

(NHAI ) by increasing budget allocation by 60% YoY

Weighted average of 6% increase in excise duty for cigarettes for ITC

Positive

Cut in personal income tax rates and higher MMNREGA allocation.

The amount set forward for the recapitalization of PSU banks remained unchanged at

Positive

INR100b for FY18

Lending target under the Pradhan Mantri Mudra Yojna was doubled to INR2.44t, from

INR1.22t in FY17.

No major announcements in the Budget related to Healthcare/Pharma space. Focus will

Neutral

be on simplifying the drug approval process. However, modalities of that were not

discussed in the budget document.

Export duty on aluminum ore (including laterite) introduced at 15%

Positive

Import duty on HRC used in welded tubes and pipes reduced from 12.5% earlier to 10%

FY17 petroleum subsidy budgeted at ~INR292b; estimate factors Brent crude price of

Positive

USD45/bbl

Changed cess on crude production from INR4,500/MT to ad-valorem rate of 20%,

positively impacting upstream companies in FY17

15

16

Cement

18

Consumer

Financials

19

21

Healthcare

Metals/Mining

Oil & Gas

23

24

Real Estate

Affordable housing to be given infrastructure status

Unsold housing projects to be taxed after one year of completion

Positive

25

26

Technology/E-Commerce

Although the plan for phasing out of exemptions will kick in from April 1, 2017, there is no

Neutral

removal or reduction of MAT at present. In order to allow companies to use MAT credit in

the future, it has been proposed to allow carry forward of MAT up to 15 years, from 10

years at present.

Positive for MCX: Creation of operational and legal framework to integrate spot and

derivatives market for commodities trading

Telecom

Reduction in communication receipts indicating no spectrum sale: Government has

Positive

reduced communication receipts for FY18 to INR443b, compared to FY17RE of INR787b.

This indicates that there may not be any spectrum auction in the FY18E.

Increase in allocation to IPDS, DDUGJY from INR79b to INR106b will drive DISCOM

Positive

investment

Increase in allocation for micro irrigation subsidy from INR18b to INR23.4b

Positive

Increase in excise of branded apparel with retail sales price of INR1,000 or more from 0%

(6%/12.5% with ITC) to 2% (12.5% with ITC)

* ITC = Input tax credit

28

Utilities

Others (Midcaps)

29

30

Source: MOSL

2 February 2017

12

Union Budget FY17-18

Automobiles

At a glance

Budget Impact: Neutral

Sector Stance: Positive

Flashback

Budget Proposals (2016)



Levy of 1-4% infrastructure cess on

PVs (excl. taxis)



TDS of 1% on purchase of luxury cars

exceeding value ~INR1m



Weighted

deduction

on

R&D

investments would be phased out

from ~200%, to ~150% from FY18 and

~100% from FY21

Major proposals

Impact

Reduction in income tax rate for assesses having income between INR250k-Positive

500k

Higher allocation to agri (+11%)/rural (+12%) will benefit 2Ws/PVs, whilePositive

higher infrastructure (+10%) allocation will benefit tipper (CV) demand

Coverage of the crop insurance scheme to increase from 30% in FY17 toPositive

50% by FY19

Decrease of ~6% in outlay for AMRUT (erstwhile JNNURM) to ~INR90b

Negative

Overall budget impact, sector outlook and recommendations











Reduction in income tax rate for income below ~INR500k:

The income tax rate is reduced from 10% to 5% for

assesses having income between INR250-500k. This would result in savings of up to ~INR12,500 p.a. This would

be beneficial for the 2W segment, especially for players like Hero and Bajaj, which have strong presence in

entry-level motorcycle.

The Budget 2017 has increased allocation to the agriculture, rural and infrastructure (including transport)

segments by 10-12%. These measures, coupled with a reduction in the tax rate at entry level and benefits of

normal monsoon, would drive a recovery in rural demand for tractors, 2Ws and PVs.

Coverage of the crop insurance scheme to increase from 30% of cropped area in FY17 to 40% in FY18 and 50%

by FY19. This, coupled with other measures for the farm segment, augurs well for tractor demand.

Decrease of ~6% in outlay for AMRUT (erstwhile JNNURM) to ~INR90b would imply lower demand for buses

from STUs. This will impact players like Tata Motors, Ashok Leyland and Eicher (VECV).

Outlook and recommendations:

The Budget continues to focus on improving rural markets and infrastructure.

While rural-focused segments like 2Ws and tractors may take 3-4 months to fully recover from the impact of

demonetization, PVs are expected to continue recovering. The CV segment is expected to benefit from pre-

buying in 4QFY17, but FY18 demand will be dependent on the magnitude of economic recovery and potential

scrappage incentives, though implementation of GST could be potentially short-term negative. This, coupled

with commodity and regulation-led cost inflation, would hurt 2Ws and CVs more than 4Ws, given the

competitive dynamics. We prefer 4Ws over CVs and 2Ws. Our top picks are Maruti and Tata Motors in large

caps, and Amara Raja and BHFC in mid caps.

Jinesh Gandhi

(Jinesh@MotilalOswal.com); +91 22 6129 1524

Aditya Vora

(Aditya.Vora@MotilalOswal.com); +91 22 6129 1533

2 February 2017

13

Union Budget FY17-18

Comparative valuation

Sector / Companies

Automobiles

Amara Raja Batt.

Ashok Leyland

Bajaj Auto

Bharat Forge

Bosch

Endurance Tech.

Eicher Motors

Escorts

Exide Inds.

Hero Motocorp

Mahindra & Mahindra

Maruti Suzuki

Tata Motors

TVS Motor

Sector Aggregate

CMP

(INR)

900

92

2,857

970

23,164

632

24,008

379

203

3,284

1,297

6,173

542

394

RECO

EPS (INR)

PE (x)

EV/EBIDTA (x)

ROE (%)

FY17E FY18E FY19E FY17E FY18E FY19E FY17E FY18E FY19E FY17E FY18E FY19E

29.2

4.8

136.2

25.8

507.6

22.6

608.7

20.7

8.2

169.5

66.0

252.7

29.0

11.9

37.7

6.4

160.6

36.4

657.7

28.7

869.5

34.2

9.7

192.2

83.7

313.1

45.6

15.4

45.4

8.2

182.3

46.3

738.1

34.6

1091.6

46.2

11.8

195.0

99.0

379.5

76.4

21.9

30.8

19.1

21.0

37.6

45.6

27.9

39.4

18.3

24.6

19.4

19.7

24.4

18.7

33.2

23.5

23.9

14.4

17.8

26.6

35.2

22.0

27.6

11.1

21.0

17.1

15.5

19.7

11.9

25.6

17.6

19.8

11.2

15.7

20.9

31.4

18.2

22.0

8.2

17.2

16.8

13.1

16.3

7.1

18.0

13.1

17.6

10.1

15.0

17.5

36.8

12.6

28.6

14.9

13.2

12.9

5.9

15.6

5.9

20.5

10.3

14.1

8.0

12.4

13.9

27.6

10.4

20.9

9.7

11.1

11.3

5.0

11.7

4.5

16.1

8.1

11.7

6.1

10.4

11.4

23.4

8.8

16.8

7.1

8.8

10.9

4.3

9.3

3.0

11.3

6.1

21.6

23.1

30.0

15.9

19.7

19.9

40.3

10.9

14.2

39.0

14.5

22.8

11.5

26.4

17.6

23.1

26.3

31.0

20.0

24.5

21.1

41.6

16.3

14.9

37.5

14.5

23.2

15.9

27.9

20.0

22.9

28.2

30.9

21.9

23.0

21.4

37.8

19.1

15.9

32.6

15.4

23.2

22.1

31.4

22.3

Buy

Buy

Buy

Buy

Neutral

Buy

Buy

Buy

Buy

Neutral

Buy

Buy

Buy

Buy

2 February 2017

14

Union Budget FY17-18

Aviation

At a glance

Major proposals

No change in excise duty on ATF

Promotion of Regional Connectivity Scheme

Budget Impact: Positive

Sector Stance: Positive

Flashback

Impact

Neutral

Positive

Budget proposals (FY16)



Withdrawal of exemption

on

construction,

commissioning,

erection or installation of works

related to airports

Customs on imported goods for the Maintenance, Repair and Overhaul

(MRO) industry made nil. Exemption from excise duty for tools and kits

by MROs subject to a certification by DGCA

Positive

Multiple initiatives to boost domestic aviation industry







Increased excise duty on ATF from 8% to 14% in the previous budget. No change in excise on ATF in this

budget.

Under the Regional Connectivity Scheme (RCS), exemption from service tax is being provided in respect of the

amount of viability gap funding (VGF) payable to the airline operator for providing the services of transport of

passengers embarking from or terminating in a Regional Connectivity Scheme (RCS) airport, for a period of one

year from the date of commencement of operations of the Regional Connectivity Scheme (RCS) airport as

notified by Ministry of Civil Aviation.

Excise duty on Aviation turbine fuel (ATF), other than for supply to aircraft under the Regional Connectivity

Scheme, was increased from 8% to 14%.

Swarnendu Bhushan

(Swarnendu.Bhushan@MotilalOswal.com); +91 22 6129 1529

Abhinil Dahiwale

(Abhinil.Dahiwale@motilaloswal.com); +91 22 3980 4309

2 February 2017

15

Union Budget FY17-18

Capital Goods/Infra

At a glance

Budget Impact: Neutral

Sector Stance: Neutral

Flashback

Budget proposals (2016)



Reduction

in

Accelerated

Depreciation for the Wind Industry to

40% (earlier 80%) from Apr, ’17

(FY18) is a negative since ~10-15% of

the industry is driven by captive

consumers who prefer the AD route.

Defense capex at INR858b in FY17

(+6% YoY) is disappointing. FY16BE

capex was at INR946b while the

revised FY16 is INR810b

Budgetary allocation to Ministry of

Water Resources, River Development

and Ganga Rejuvenation raised to

INR39b(+101% YoY)

Major proposals

Impact

Generation Based incentives (GBI) for the wind industry have not been Negative

extended beyond March-2017. This would lead to slowdown in capacity

addition in FY18.

Defense capex at INR865b in FY18 (+9% YoY over FY17RE of INR792b) is Negative

disappointing as it is at the same level as budgeted for FY17. FY17BE was

at INR862b.

Focus on infrastructure has continued with a) Rail capex planned at Positive

INR1.31t (+8% YoY) with budgetary allocation increased from INR462b

(FY17RE) to INR550b (+19% YoY). Road capex planned at INR1.24t in

FY18E (+11% YoY) over FY17RE of INR1.11t, driven by increase in

budgetary support to INR649b (+24% YoY over FY17RE of INR524b).

Key centrally sponsored schemes which have seen a material increase inPositive

budgetary allocation are: a) Pradhan Mantri Awas Yojna (Urban and Rural)

where budgetary allocation has been increased to INR290b from INR209b,

b) Deen Dayal Upadhay Gram Jyoti Yojna for rural electrification at INR48b

(+44% YoY) and Integrated Power Development Scheme(IPDS) at INR58b

(+29% YoY), c) Metro Projects at INR180b (15% YoY), d) Namami Gange at

INR23b (+56% YoY) but at the same level as FY17BE.

Resin and catalyst for manufacture of cast components for Wind OperatedPositive

Energy Generators – Basic Customs duty cut to 5% from 7.5% while CVD

(earlier 12.5%) and SAD (earlier 4%) have been cut to zero. Similarly, excise

duty has been cut to zero from 12.5%. Will reduce the cost of manufacture

for WTGs.

Reduction in customs duty on all parts for use in the manufacture of LEDPositive

lights or fixtures, including LED lamps. BCD reduced to 5% and CVD reduced

to 6%.





Overall budget impact, sector outlook and recommendations









Focus on infrastructure has continued with a) rail capex planned at INR1.31t (+8% YoY); budgetary allocation

increased from INR462b (FY17RE) to INR550b (+19% YoY), b) road capex planned at INR1.24t in FY18E (+11%

YoY) over FY17RE of INR1.11t, driven by increase in budgetary support to INR649b (+24% YoY over FY17RE of

INR524b), c) defense capex at INR865b in FY18 (+9% YoY over FY17RE of INR792b) is disappointing as it is at

the same level as budgeted for FY17. FY17BE was at INR862b.

FY18 budget has also seen an increase in allocation for Pradhan Mantri Awas Yojna (Urban and Rural) to

INR290b from INR209b; Deen Dayal Upadhay Gram Jyoti Yojna at INR48b (+44% YoY); Integrated Power

Development Scheme (IPDS) at INR58b (+29% YoY); Metro Projects at INR180b (15% YoY); and the Namami

Gange project at INR23b (+56% YoY) but at the same level as FY17BE.

Key negative for the sector is the non-extension of generation-based incentives for the wind sector beyond

FY17, which would lead to slowdown in wind capacity addition.

Our top pick is L&T in the large cap space, and Crompton Consumer, Havells, VA Tech Wabag and Bharat

Electronics in midcaps.

Ankur Sharma

(Ankur.VSharma@MotilalOswal.com); +91 22 6129 1556

Amit Shah

(Amit.Shah@MotilalOswal.com); +91 22 6129 1543

2 February 2017

16

Union Budget FY17-18

Comparative valuation

Sector / Companies

Capital Goods

ABB

Bharat Electronics

BHEL

CG Consumer Elect.

Crompton Greaves

Cummins India

GE T&D India

Havells India

Inox Wind

K E C International

Larsen & Toubro

Siemens

Solar Inds.

Thermax

Va Tech Wabag

Voltas

Sector Aggregate

CMP RECO

(INR)

1,107

1,566

140

193

66

849

308

426

183

154

1,491

1,169

705

806

486

334

Neutral

Buy

Sell

Buy

Sell

Neutral

Neutral

Buy

Neutral

Buy

Buy

Neutral

Neutral

Sell

Buy

Neutral

EPS (INR)

PE (x)

EV/EBIDTA (x)

ROE (%)

FY17E FY18E FY19E FY17E FY18E FY19E FY17E FY18E FY19E FY17E FY18E FY19E

18.2

61.9

3.9

4.6

0.6

26.0

6.0

8.9

17.5

10.5

53.1

17.0

19.3

24.8

25.2

11.8

26.9

73.3

5.5

5.5

1.9

30.2

11.0

12.0

20.0

12.3

63.7

25.3

22.9

27.6

32.6

14.0

32.2

85.5

8.5

6.7

3.2

36.3

11.4

13.8

23.8

13.5

77.8

33.2

29.6

32.0

36.0

17.6

60.8

25.3

35.4

42.2

118.5

32.7

51.3

47.7

10.5

14.6

28.1

68.8

36.6

32.6

19.3

28.3

32.9

41.1

21.4

25.4

35.3

35.6

28.1

27.9

35.6

9.2

12.6

23.4

46.2

30.8

29.3

14.9

23.8

26.5

34.4

18.3

16.5

28.5

20.6

23.4

27.1

30.9

7.7

11.4

19.2

35.2

23.8

25.2

13.5

19.0

21.3

31.1

19.6

19.5

25.8

8.5

30.1

36.5

27.7

7.4

7.9

20.1

39.0

20.3

21.1

9.7

19.5

21.1

20.6

16.7

10.9

22.2

6.9

25.0

15.8

23.5

6.8

6.9

15.4

30.1

17.4

18.3

7.4

17.0

16.2

17.6

14.1

8.6

18.2

5.6

20.2

14.2

19.8

5.5

6.2

13.5

23.3

13.8

15.2

6.7

12.9

13.7

11.4

19.7

2.9

94.3

4.2

22.0

11.7

19.5

19.3

16.6

10.8

9.2

18.6

12.2

13.2

15.4

9.6

14.5

19.0

3.9

73.3

6.0

23.1

20.7

23.6

18.6

16.8

12.0

12.6

19.0

12.5

15.4

16.4

11.1

15.4

19.3

5.8

66.1

8.0

25.2

19.2

24.0

18.8

16.2

13.3

15.0

20.9

13.4

15.2

18.1

12.6

2 February 2017

17

Union Budget FY17-18

Cement

At a glance

Budget Impact: Positive

Sector Stance: Positive

Flashback

Major proposals

Increased allocation to affordable housing through Pradhan Mantri Awas

Yojna (PMAY) by 53% YoY

Upsurge in spending toward infrastructure through the National Highway

Authority of India (NHAI) by increasing budget allocation by 60% YoY

Railway allocation higher by 8% YoY with a focus toward building

infrastructure, improving safety and refining maintenance

Set-off of loss against housing property capped at INR2 lakh

Impact

Positive

Positive

Positive

Negative

Budget proposals (2016)



Excise duty exemption was extended to

ready mix concrete manufacturers from

6% (with ITC) and 2% (w/o ITC)

currently



Increased clean energy cess on coal

from INR200/ton to INR400/ton that

marginally increased energy cost

Boost across all cement demand drivers: Roads, Railways and Housing















Strong indirect benefits with a rise in allocation toward various infrastructure areas, such as roads (INR1,133b,

13% YoY), housing (INR64b, 21% YoY), rural development (INR1,054b, 10% YoY), railways (INR1,310b, 8% YoY)

and urban development (INR342b, 5% YoY).

Overall spending through various schemes – such as PMAY, PMGSY to support rural roads, PMKVY to support

irrigation projects, and National Highway Authority of India – will increase to INR 730b (+35% YoY).

PMAY spending was increased in the Budget allocation by 53% YoY to INR230b to primarily support affordable

housing with an aim to build 10m permanent houses by 2022.

NHAI government allocation increased by 60% YoY to INR239b to support road development.

Other announcements that will benefit cement demand are MGNREA spending (INR480b, +20% YoY), Gram

Panchayats (INR8b, +17% YoY), Irrigation (INR 74b, +42% YoY) and upgrading affordable housing to

infrastructure status.

The set-off of loss against housing property has been capped at INR2lakh, which is likely to negatively impact

real estate demand, particularly in metro/tier I cities. This, in turn, will impact cement demand coming from

urban real estate.

Our top picks are

Shree, Ramco and Dalmia Cements.

Comparative valuation

Sector / Companies

Cement

ACC

Ambuja Cements

Birla Corporation

Dalmia Bharat

Grasim Industries

India Cements

J K Cements

JK Lakshmi Cem.

Orient Cement

Prism Cement

Ramco Cements

Shree Cement

Ultratech Cement

Sector Aggregate

CMP

(INR)

1,465

235

741

1,903

940

159

739

383

139

97

715

15,951

3,783

RECO

EPS (INR)

PE (x)

EV/EBIDTA (x)

ROE (%)

FY17E FY18E FY19E FY17E FY18E FY19E FY17E FY18E FY19E FY17E FY18E FY19E

32.6 48.9 65.6 44.9 30.0

5.7

6.9

7.4

41.4 33.9

33.8 44.5 56.6 21.9 16.7

34.2 50.4 72.3 55.6 37.7

70.2 86.5 110.7 13.4 10.9

7.3

10.7 12.4 21.7 14.9

26.4 36.5 48.7 27.9 20.2

4.7

12.2 17.6 81.1 31.4

-1.1

3.3

5.7 -126.8 41.7

0.9

3.5

5.1 108.4 27.6

29.4 31.5 42.3 24.3 22.7

387.1 582.8 729.9 41.2 27.4

93.5 129.6 161.2 40.5 29.2

31.8 23.6

22.3

31.8

13.1

26.3

8.5

12.9

15.2

21.7

24.2

19.1

16.9

21.9

23.5

18.7

21.9

28.8

11.2

13.5

6.5

9.4

12.8

16.4

20.5

24.5

15.1

21.8

22.5

15.7

17.1

25.2

8.4

11.3

5.1

8.4

10.7

13.0

12.9

14.4

12.8

16.3

18.0

12.6

14.5

22.5

6.8

10.7

3.3

8.0

9.6

10.7

11.2

9.9

10.2

13.1

14.6

10.2

7.2

5.9

8.5

7.6

12.0

5.8

10.9

4.2

-2.3

4.5

20.6

19.9

11.7

10.1

10.9

7.1

9.8

10.3

13.1

7.6

13.7

10.5

6.8

16.0

18.6

24.4

14.5

12.5

14.6

7.3

11.9

13.1

14.7

7.8

16.1

14.7

11.0

19.8

21.0

24.3

15.8

14.1

Neutral

Buy

Buy

Buy

Neutral

Neutral

Buy

Buy

Buy

Buy

Buy

Buy

Buy

Abhishek Ghosh

(Abhishek.Ghosh@motilaloswal.com); +91 22 3982 5436

Varun Gadia

(Varun.Gadia@motilaloswal.com);

2 February 2017

18

Union Budget FY17-18

Consumer

At a glance

Major proposals

Budget Impact: Positive

Sector Stance: Positive

Flashback

Impact

Neutral

Negative

Positive

Positive

Weighted average of 6% increase in excise duty for cigarettes

Upper limit on jewellery cash transaction at INR0.3m

Enhanced spending in rural and agri sectors

Revision in direct tax rate

Budget proposals (2016)



Weighted average of 10% increase in

excise duty for cigarettes



Excise duty of 1% imposed on jewelry,

import duty unchanged at 10%



Enhanced spending in rural and agri

sectors



Service tax increased from 14.5% to

15.1%

Overall budget impact, sector outlook and recommendations















Cigarettes:

After six years of double-digit excise hikes on cigarettes, there was some relief in the FY18 budget.

Excise duty is hiked by 6% across categories, as against our expectations of +15%. It can also be observed that

the pace of excise duty increase on cigarettes has come off progressively over FY13-18.

Notably, the <65mm segment has not seen disproportionate excise hike for the second year now. This had led

to volumes surge for ITC in FY13/FY14 and again over the past year since there was no disproportionate

increase in the last budget. <65mm segment now contributes over 30% of volumes.

While the upcoming GST rate for cigarettes is the key monitorable, we note that ITC has already taken a 15%

price increase in its key brands of Gold Flake and Navy Cut toward end-December; a further price increase is

expected in March/April after GST rates are announced.

We expect 4%/5% volume increase for FY18/FY19 in cigarettes, as against our earlier expectation of 3% hike

for both years.

Jewellery:

An upper limit of INR0.3m has been imposed on cash transactions in jewellery purchase. Due to the

maximum limit imposed by credit card companies on single transaction, high-value jewellery sales had

significant proportion of cash even in case of organized players like Titan. This decision will negatively affect

jewellery sales.

Staples:

Changes to the personal income tax rates will result in savings of INR 12,500 at the hands of tax payers

with annual income of INR0.5-INR5m. It also effectively halves the tax outgo for people earning between

INR0.35-0.5m. There is zero tax liability for people earning up to INR0.3m. All this results in additional

disposable income at the hands of the consumer. At the macro level, enhanced allocation of 24% YoY to

INR1,872b toward the rural, agriculture and allied sectors is also a positive for consumption. This includes 25%

higher allocation for MNREGA to INR480b.

Our top picks:

The Budget has been positive for the consumer sector, with cigarettes excise increase coming in

lower than our expectations, effective reduction in income tax rates, and enhanced allocation for the rural,

agri and allied schemes. Our top ideas in consumer space include Britannia, Emami, Colgate and Marico. With

budget overhang behind, better visibility on volumes and attractive valuations, we continue to like ITC as well.

Changes to the model have led to a 3%/5% increase in FY18/FY19 EPS. Maintaining 28x target multiple (in line

with three-year average) and rolling forward to March 2019E EPS (from December 2018 earlier), we get a

revised target price of INR320 (19% upside).

Krishnan Sambamoorthy

(Krishnan.Sambamoorthy@MotilalOswal.com); +91 22 6129 1545

Vishal Punmiya

(Vishal.Punmiya@MotilalOswal.com); +91 22 6129 1547

2 February 2017

19

Union Budget FY17-18

Comparative valuation

Sector / Companies

Consumer

Asian Paints

Britannia

Colgate

Dabur

Emami

Godrej Consumer

GSK Consumer

Hind. Unilever

ITC

Jyothy Labs

Marico

Nestle

P&G Hygiene

Page Industries

Parag Milk Foods

Pidilite Inds.

Radico Khaitan

United Breweries

United Spirits

Sector Aggregate

CMP

(INR)

990

3,231

893

276

1,106

1,614

5,179

854

270

352

258

5,909

6,958

14,381

265

690

118

817

2,293

RECO

EPS (INR)

PE (x)

EV/EBIDTA (x)

ROE (%)

FY17E FY18E FY19E FY17E FY18E FY19E FY17E FY18E FY19E FY17E FY18E FY19E

20.2

70.6

21.7

7.3

24.5

36.8

157.7

19.3

8.4

7.6

6.0

111.5

138.5

247.4

7.0

16.4

5.3

12.3

28.6

22.9

82.1

25.8

8.3

29.8

42.8

178.8

21.5

9.5

9.0

7.2

139.2

168.9

312.7

9.7

18.4

7.1

16.4

47.0

26.8

97.8

31.6

9.7

36.0

49.6

201.2

24.8

10.8

10.5

8.5

168.7

201.7

402.4

14.1

20.6

8.2

19.7

64.0

48.9

45.8

41.2

37.8

45.2

43.8

32.8

44.3

32.2

46.4

43.3

53.0

50.2

58.1

37.7

42.2

22.5

66.3

80.1

40.6

43.2

39.4

34.6

33.2

37.1

37.7

29.0

39.7

28.4

39.2

35.7

42.5

41.2

46.0

27.4

37.6

16.8

50.0

48.8

35.0

37.0

33.0

28.2

28.4

30.7

32.5

25.7

34.4

24.9

33.5

30.4

35.0

34.5

35.7

18.8

33.5

14.4

41.5

35.9

30.1

31.1

33.0

25.0

31.1

33.2

31.5

22.6

30.7

21.7

25.9

29.8

31.5

32.6

38.0

16.0

27.6

12.6

31.6

38.2

27.2

27.9

27.9

20.8

27.3

28.8

27.3

19.6

27.8

18.9

22.8

24.7

25.1

26.0

29.3

12.9

24.4

11.4

25.4

28.4

23.5

24.0

23.1

17.1

23.2

24.3

23.8

16.8

24.1

16.2

20.3

21.2

20.7

21.5

23.4

9.8

21.4

10.3

20.8

22.3

20.0

32.5

42.2

54.9

28.3

33.8

22.4

25.1

67.6

28.4

15.7

32.8

35.9

27.7

42.9

10.8

27.6

7.3

14.5

20.8

29.3

32.3

38.8

60.1

27.3

33.0

22.2

24.7

78.4

28.1

17.2

33.1

39.2

29.4

42.7

10.5

25.6

9.1

16.9

24.0

29.6

32.5

36.9

68.5

27.2

33.2

21.9

24.2

92.5

28.2

18.3

34.8

40.1

30.3

44.0

13.5

23.5

9.9

17.5

24.9

30.0

Neutral

Buy

Buy

Neutral

Buy

Neutral

Neutral

Neutral

Buy

Neutral

Buy

Neutral

Buy

Buy

Neutral

Buy

Neutral

Buy

Buy

2 February 2017

20

Union Budget FY17-18

Financials

At a glance

Budget Impact: Positive

Sector Stance: Positive

Flashback

Major proposals

Deduction limits in case of loan loss provisions revised upward from 7.5%

to 8.5% of total income

Incentives to promote digital transactions

Impact

Marginally

Positive

Positive

Lending target under Mudra Scheme doubled to INR2.44t

Positive

NHB refinancing target for affordable housing at INR200b

Neutral

Infrastructure status to affordable housing

Positive

PSU bank recapitalization amount remains unchanged at INR100b for FY18 Negative

Budget proposals (2016)



Comprehensive bankruptcy code of

global standards to be brought in

FY17



Capital allocated for PSU banks at

INR250b for FY17



Bank Board Bureau will be

operationalized during 2016-17



Deduction for additional interest of

INR50,000 per annum for loans up to

INR3.5m sanctioned in FY17 for first-

time home buyers, where house cost

does not exceed INR5m

Overall budget impact: Medium- to long-term positive; Lacks near-term triggers





















The amount set forward for the recapitalization of PSU banks remained unchanged at INR100b for FY18, in line

with the roadmap that had been set under the ‘Indradhanush’ scheme. However, the government assured that

additional funds will be available for equity infusion in PSU banks, if required. Considering stressed balance

sheets and low capitalization, we were expecting higher allocation.

Capital infusion in other PSU entities: a) Subscription to share capital of NHB has increased from INR14b in

FY17 budget to INR35b in FY18 (this includes INR5b lending for Polvaram project). b) No allocation for MUDRA

v/s INR9b a year back. c) IIFCL recapitalization budget of INR5b v/s no allocation a year back. d) Postal services

have set aside INR1.5b for launch of India post bank.

Lending target under the Pradhan Mantri Mudra Yojna was doubled to INR2.44t, from INR1.22t in FY17.

Deduction limits in respect of loan loss provisions have been increased from 7.5% of total income (computed

before any such deduction) to 8.5%. This will have a marginal impact in overall tax provisions.

Targeted agricultural credit set at INR10t for FY18 (INR9.1t as of December 2016)

NHB is expected to refinance affordable housing loans worth INR200b in FY18. This should be a boost to HFCs

like CanFin Homes, GRUH Finance and Repco for whom NHB refinancing is a significant share of liability

franchise.

Affordable housing also gets infrastructure status, which could result in lower cost of funding, higher liquidity

and wider investor base.

Listing and trading of Security Receipts issued by a securitization company or a reconstruction company under

the SARFAESI Act will be permitted in SEBI registered stock exchanges. This will enhance capital flows into the

securitization industry and will particularly be helpful to deal with bank NPAs.

There are some further incentives given to developers of affordable housing. Currently, developers can claim

100% deduction on profits subject to certain restrictions like size of the house, geographical location and time

taken to complete the project. This budget proposes minor relaxations in these conditions. This increases

opportunity size for financiers in the affordable housing space.

Our top picks are

ICICIBC, SBIN, PNB, YES and Equitas. LICHF

and

SCUF

in NBFCs.

Alpesh Mehta

(Alpesh.Mehta@MotilalOswal.com); +91 22 6129 1526

Sohail Halai

(Sohail.Halai@MotilalOswal.com); +91 22 6129 1544

2 February 2017

21

Union Budget FY17-18

Comparative valuation

Sector / Companies

Banks-Private

Axis Bank

DCB Bank

Equitas Holdings

Federal Bank

HDFC Bank

ICICI Bank

IDFC Bank

IndusInd Bank

J&K Bank

Kotak Mahindra Bank

RBL Bank

South Indian Bank

Yes Bank

Private Bank Aggregate

Banks-PSU

Bank of Baroda

Bank of India

Canara Bank

IDBI Bank

Indian Bank

Oriental Bank of Commerce

Punjab National Bank

State Bank

Union Bank

PSU Bank Aggregate

NBFC

Bajaj Finance

Bharat Financial

Dewan Housing

GRUH Finance

HDFC

Indiabulls Housing

LIC Housing Fin

M & M Financial

Muthoot Finance

Power Finance Corp

Repco Home Fin

Rural Electric. Corp.

Shriram City Union

Shriram Transport Fin.

NBFC Aggregate

Financials Sector Aggregate

CMP

(INR) Reco

476

122

170

79

1,306

281

61

1,308

64

776

401

21

1,413

Neutral

Neutral

Buy

Buy

Buy

Buy

Neutral

Buy

Neutral

Buy

Buy

Neutral

Buy

EPS (INR)

PE (x)

PB (x)

ROE (%)

FY17E FY18E FY19E FY17E FY18E FY19E FY17E FY18E FY19E FY17E FY18E FY19E

14.1

7.1

6.0

4.6

56.9

17.2

3.1

48.4

-22.8

26.3

12.4

2.8

79.3

25.0

8.6

6.8

5.5

68.3

17.9

3.9

58.7

14.5

32.3

17.5

3.1

97.0

46.8

10.9

8.9

6.9

81.5

21.8

4.9

71.2

15.8

41.3

24.6

3.8

118.4

33.9

17.3

28.4

17.3

23.0

16.3

19.9

27.0

-2.8

29.5

32.2

7.7

17.8

23.3

14.1

-30.3

12.2

52.3

9.0

6.2

16.5

27.5

9.7

20.9

31.3

17.7

9.6

45.1

30.2

11.0

15.2

34.0

11.8

5.7

26.1

5.0

20.7

16.9

16.0

20.3

19.1

14.2

24.9

14.5

19.1

15.7

15.4

22.3

4.5

24.0

22.9

6.9

14.6

18.4

9.2

6.5

8.0

12.4

8.5

5.6

10.7

11.6

5.0

10.0

23.9

18.6

8.3

36.1

27.4

8.9

12.8

25.9

10.1

5.3

17.8

4.2

14.5

12.6

13.8

14.7

10.2

11.3

19.2

11.4

16.0

12.9

12.5

18.4

4.1

18.8

16.3

5.7

11.9

14.2

6.6

4.8

5.2

9.3

7.2

3.9

7.9

8.7

3.3

7.4

18.0

16.4

7.0

30.2

24.7

7.0

10.9

20.7

8.3

3.4

13.0

3.7

11.5

10.1

10.9

11.3

2.1

1.8

2.5

1.6

4.0

1.9

1.4

3.9

0.6

3.7

3.5

0.7

3.6

2.8

1.1

0.5

0.6

0.7

0.9

0.3

0.8

1.2

0.5

0.9

6.4

4.0

1.5

12.8

5.6

2.7

2.7

2.6

2.0

0.9

3.8

0.9

2.5

2.0

2.8

2.0

1.9

1.6

2.3

1.5

3.4

1.8

1.3

3.4

0.5

3.3

3.1

0.7

3.0

2.5

1.0

0.5

0.6

0.7

0.8

0.3

0.7

1.1

0.5

0.8

5.2

3.3

1.3

10.5

5.1

2.4

2.3

2.4

1.8

0.8

3.2

0.8

2.2

1.8

2.4

1.8

1.6

1.4

2.1

1.3

2.9

1.6

1.2

2.9

0.5

2.8

2.7

0.6

2.5

2.2

0.9

0.4

0.5

0.7

0.8

0.3

0.7

1.0

0.4

0.8

4.2

2.7

1.1

8.7

4.2

2.1

2.0

2.3

1.6

0.7

2.6

0.7

1.9

1.5

2.1

1.6

6.3

10.9

11.2

9.4

18.6

10.4

7.4

15.5

-18.9

13.5

12.6

9.7

22.1

12.0

8.1

-1.7

4.9

1.4

10.4

4.8

4.8

4.7

5.2

4.2

22.5

30.0

16.6

31.0

19.6

26.0

19.1

7.7

18.4

16.8

15.7

18.8

12.7

12.3

17.3

9.7

10.3

11.8

9.7

10.4

19.3

9.9

8.9

16.4

12.4

14.5

14.4

10.0

22.6

13.6

11.5

7.5

7.2

5.8

10.2

5.1

7.0

10.1

9.5

8.3

24.1

19.4

16.6

32.1

19.6

28.9

19.5

9.7

19.0

16.2

19.6

19.5

16.1

14.7

17.7

12.2

17.3

13.1

11.4

12.1

19.8

11.3

10.2

17.2

12.0

16.0

17.7

11.3

23.0

15.5

14.5

9.5

10.3

7.3

11.1

7.1

8.8

12.2

12.9

10.4

25.9

18.2

17.2

31.6

19.0

32.3

19.6

11.4

20.4

22.3

22.2

18.9

17.6

16.1

19.0

14.2

173

121

293

80

275

120

140

270

152

Buy

Neutral

Neutral

Neutral

Buy

Neutral

Buy

Buy

Buy

12.3

-4.0

23.9

1.5

30.4

19.3

8.5

9.8

15.6

18.8

18.5

36.7

6.4

32.2

21.3

13.2

23.3

30.4

26.2

25.1

56.0

8.6

38.1

31.0

17.8

30.9

45.7

1,067

801

295

355

1,415

766

570

286

324

136

671

148

1,892

980

Buy

Buy

Buy

Neutral

Buy

Buy

Buy

Buy

Buy

Neutral

Buy

Neutral

Buy

Buy

34.1

45.2

30.7

7.9

46.8

69.5

37.6

8.4

27.5

24.0

25.7

29.4

91.2

58.1

44.6 59.3

43.2 48.9

35.6 42.0

9.8

11.7

51.7 57.3

86.2 109.6

44.7 52.6

11.1 13.9

32.0 39.0

25.5 40.5

37.7 51.6

35.3 39.9

130.5 164.2

77.9 96.7

2 February 2017

22

Union Budget FY17-18

Metals and Mining

At a glance

Budget Impact: Neutral

Sector Stance: Positive

Flashback

Major proposals

Import duty on HRC used in welded tubes and pipes reduced from 12.5%

earlier to 10%

Import duty on manganese ore coated cold rolled steel coils used in

CRGO steel reduced from 10% to 5%

Export duty on aluminum ore (including laterite) introduced at 15%

Impact

Negative

Neutral

Positive

Budget proposals (2016)



Cess on coal increased from INR200/t

to INR400/t



Increase in import duty on primary

aluminum from 5% to 7.5% and on

other aluminum products from 7.5%

to 10%



Removal of export duty on iron ore

below 58% Fe content from earlier

10% on fines and 30% on lumps



Lowering export duty on bauxite from

20% to 15%

Overall budget impact, sector outlook and recommendations













The impact of reduction in import duty on specific steel products is immaterial. Duty reduction on HRC used in

tubes and pipes is marginal. Also, the volume of cold rolled steel used in CRGO application is insignificant.

The introduction of export duty on laterite ore (used in alumina making) is marginally positive for Vedanta.

Steel companies have taken significant price hikes in December and January, which will boost realization in 4Q.

However, the weakening domestic market warrants a price cut in February/March. Cost of production will rise

on delayed impact of an increase in coking coal cost and rise in iron ore prices. Margins for steel mills are likely

to come under pressure in 4Q. We like JSW Steel among the steel names for its low cost operating, healthy FCF

generation and volume growth in FY18E. We maintain our Sell rating on Tata Steel and SAIL.

Hindalco and Nalco are benefiting from captive raw material sourcing in the wake of rising input prices

globally. Their strong cost positioning drives our strong FCF generation outlook and preference for the stocks.

Coal India is a beneficiary of higher global coal prices as it will accelerate substitution to domestic coal. Coal

dispatches are also likely to improve as the de-stocking cycle ends and power demand growth picks up.

However, uncertainty around grade slippage and impending wage hikes is driving earnings volatility. We

remain Neutral.

We are positive on NMDC due to rising domestic iron ore demand, higher iron ore prices and improved capital

allocation with plans to divest from the non-core steel plant.

Comparative valuation

Sector / Companies

Metals

Hindalco

Hindustan Zinc

JSPL

JSW Steel

Nalco

NMDC

SAIL

Tata Steel

Vedanta

Sector Aggregate

CMP

(INR)

199

306

83

197

77

149

66

473

261

RECO

EPS (INR)

PE (x)

EV/EBIDTA (x)

ROE (%)

FY17E FY18E FY19E FY17E FY18E FY19E FY17E FY18E FY19E FY17E FY18E FY19E

18.5

21.5

-23.8

13.6

3.7

10.9

-10.4

11.7

21.4

22.1

25.4

-8.4

19.0

4.8

10.8

-14.3

37.1

27.3

24.7

25.3

-5.3

19.4

4.9

11.3

-1.4

40.7

27.9

10.7

14.2

-3.5

14.5

20.8

13.6

-6.3

40.4

12.2

19.9

9.0

12.0

-9.9

10.4

16.0

13.8

-4.6

12.8

9.5

14.6

8.1

12.1

-15.6

10.2

15.6

13.2

-48.0

11.6

9.3

12.0

7.1

9.5

12.0

8.0

10.0

9.7

10.1

5.7

9.0

6.3

7.3

11.2

6.6

6.7

8.9

145.5

8.1

4.6

7.5

5.6

6.9

10.3

6.0

6.4

8.5

12.4

7.7

4.3

6.7

17.3

22.5

-12.8

16.4

7.1

12.8

-11.5

8.7

13.0

8.0

18.1

22.6

-5.0

19.6

8.7

14.2

-18.4

28.3

14.8

10.2

17.1

19.4

-3.3

17.1

8.5

13.7

-2.0

25.4

14.0

11.5

Buy

Neutral

Neutral

Buy

Buy

Buy

Sell

Sell

Neutral

Sanjay Jain

(SanjayJain@MotilalOswal.com);+9122 3982 5412

Dhruv Muchhal

(Dhruv.Muchhal@MotilalOswal.com); +9122 3027 8033

2 February 2017

23

Union Budget FY17-18

Oil & Gas

At a glance

Budget Impact: Positive

Sector Stance: Positive

Flashback

Major proposals

FY18 petroleum subsidy budgeted at ~INR251b; estimate factors in Brent

crude price of ~USD52/bbl

Creation of integrated energy PSU to rival global giants and domestic

private players

Creation of additional strategic petroleum reserve, cumulative capacity

of 15.33mmt

Reduction in customs on LNG from 5% to 2.5%

Impact

Neutral

Neutral

Neutral

Budget proposals (2016)



Budgeted FY16 government subsidy

stands at INR291b. This has been

revised downward to INR276b now



Cess on crude production changed

from INR4,500/mt to 20% ad valorem



Increased excise duty on ATF from 8%

to 14%

Positive

Largely positive; beneficial for LNG consumers











FY18 petroleum sector budgeted amount stands at INR251b (v/s actual INR276b in FY17). We estimate that

this factors in Brent crude price of USD52/bbl.

The government has talked about creating an integrated oil PSU to rival global energy giants and domestic

private players. Details of the same are not available. It remains to be seen whether a holding company is

created for larger PSUs or consolidation of smaller players is done.

Customs duty on LNG has been reduced from 5% to 2.5%. This would increase consumption of LNG and be

beneficial for Petronet LNG, GAIL, GSPL, CGD companies, especially Gujarat Gas.

Cess on crude production had been revised from INR4,500/MT to 20% ad-valorem in FY17. There had been

demand from upstream companies for reduction of the same, which has not come in the budget.

Excise duties for petrol and diesel remained unchanged. Crude oil customs duty remains nil.

Comparative valuation

Sector / Companies

Oil & Gas

BPCL

Cairn India

GAIL

Gujarat State Petronet

HPCL

Indraprastha Gas

IOC

MRPL

Oil India

ONGC

Petronet LNG

Reliance Inds.

Oil & Gas Sector Aggregate

Oil & Gas Ex OMCs

CMP RECO

(INR)

693

283

485

156

538

961

375

101

331

200

388

1,049

12

9

Buy

Neutral

Neutral

Neutral

Buy

Neutral

Buy

Buy

Buy

Neutral

Buy

Neutral

EPS (INR)

PE (x)

EV/EBIDTA (x)

ROE (%)

FY17E FY18E FY19E FY17E FY18E FY19E FY17E FY18E FY19E FY17E FY18E FY19E

55.5

14.0

28.7

8.8

52.7

42.0

43.5

17.0

27.5

12.6

19.8

99.2

56.4 59.8

12.5 12.8

36.4 44.7

11.0 13.2

45.1 46.2

43.7 47.6

39.9 41.7

15.8 17.2

39.0 39.8

21.1 21.0

26.9 36.3

107.9 113.1

12.5

20.3

16.9

17.8

10.2

22.9

8.6

6.0

12.1

15.9

19.6

10.6

11.3

12.2

12.3

22.7

13.3

14.2

11.9

22.0

9.4

6.4

8.5

9.5

14.4

9.7

9.9

9.6

11.6

22.1

10.8

11.8

11.6

20.2

9.0

5.9

8.3

9.5

10.7

9.3

9.4

9.2

8.2

7.5

10.6

10.0

6.6

12.7

6.0

4.4

8.4

3.7

12.2

5.9

5.8

5.4

7.6

6.1

8.5

6.8

7.4

11.8

6.1

4.5

5.8

2.8

8.9

4.4

4.8

4.1

7.2

5.1

7.0

6.4

7.4

10.7

5.7

3.0

5.7

2.7

6.1

3.6

4.4

3.6

26.2

5.3

12.9

11.9

26.6

21.8

25.9

39.4

9.5

8.6

21.5

11.6

12.9

10.1

22.7

4.6

13.2

13.5

19.7

19.8

20.7

28.4

12.7

13.8

24.7

11.4

13.4

11.8

20.8

4.6

14.9

14.5

17.8

18.6

19.1

25.1

12.1

13.0

27.6

10.9

12.9

11.4

Swarnendu Bhushan

(Swarnendu.Bhushan@MotilalOswal.com); +91 22 6129 1529

Abhinil Dahiwale

(Abhinil.Dahiwale@motilaloswal.com); +91 22 3980 4309

2 February 2017

24

Union Budget FY17-18

Real Estate

At a glance

Major proposals

Affordable housing to be given infrastructure status

Capital gains on JDA (joint development agreement) to be levied on

possession of project

Unsold housing projects to be taxed after one year of completion

Impact

Positive

Positive

players

Godrej

Negative for

Oberoi

Negative

for

like

Budget Impact: Positive

Flashback

Budget proposals (2016)





DDT removed at SPV (holding assets)

for distributing dividend to REIT

Additional deduction of interest of

INR50K for loan up to 35 lakhs (house

value <=INR 50lakhs)

Service tax exemption for low-cost

housing up to carpet area of 60sq mt

under any government state scheme

or PPP from 5.6% now



Set-off of loss against housing property capped at INR2 lakh

Affordable housing granted infrastructure status









Borrowing cost for developers would come down due to wider options of financing. Additionally, the extension

of timeline for project completion from three to five years would benefit developers.

Capital gains on JDA to be levied only on completion and possession of the project, as against the earlier rule

of capital gains being effective on entering the agreement. This would benefit players like Godrej Properties

and Sobha.

Developers would have to pay tax on notional rent on unsold housing stock post one year from possession of

completion certificate. Developers like Oberoi to be negatively impacted. DLF would possess substantial

portion of unsold housing stock by end-FY18.

The set-off of loss against housing property has been capped at INR2 lakh, which is likely to negatively impact

real estate demand, particularly in metro/tier I cities.

2 February 2017

25

Union Budget FY17-18

Technology / Exchanges / Ecommerce

Budget Impact: Neutral

At a glance

Major proposals

Allow carry forward of MAT up to a period of 15 years instead of 10 years

at present

The Commodities markets require further reforms for the benefits of

farmers. An expert committee will be constituted to study and promote

creation of an operational and legal framework to integrate spot market

and derivatives market for commodities trading. e-NAM would be an

integral part of such framework

For the purpose of carry forward of losses in respect of start-ups, the

condition of continuous holding of 51% of voting rights has been relaxed

subject to the condition that the holding of the original

promoter/promoters continues. Also, the profit-linked deduction

available to the start-ups for 3 years out of 5 years is being changed to 3

years out of 7 years

Impact

Neutral

Neutral

Sector

Stance: Neutral

Flashback

Budget Proposals (2016)



The benefit of Section 10AA to new

SEZ units will be available to those

units which commence activity before

March 31, 2020, as opposed to the

earlier sunset period of March 31,

2017



Investment limit for foreign entities in

Indian stock exchanges enhanced

from 5% to 15%; development of new

derivative products in commodities



100% deduction of profits would be

allowed for 3 out of 5 years for start-

ups set up during April 2016 to March

2019

Neutral

Overall budget impact, sector outlook and recommendations









Extension of SEZ tax benefits:

Although the plan for phasing out of exemptions will kick in from April 1, 2017,

there is no removal or reduction of MAT at present. In order to allow companies to use MAT credit in the

future, it has been proposed to allow carry forward of MAT up to 15 years, from 10 years at present.

Net positive implication for MCX but over longer term:

Creation of operational and legal framework to

integrate spot and derivatives market for commodities trading could lead to higher participation on the

exchange, resulting out of increased participation or increased volumes. However, the practical implications

and guidelines will have to be made in order to gauge the impact.

Tax benefits for the start-up ecosystem:

100% deduction of profits for 3 out of 7 years for start-ups set up

during April 2016 to March 2019. This was earlier available for 3 out of 5 years. The other change relates to

carrying forward of losses, for which the condition of holding 51% of voting rights has been relaxed, subject to

the condition that the holding of the original promoter continues.

Our top picks are

INFO, HCLT, TECHM

and

MCX.

Ashish Chopra

(Ashish.Chopra@MotilalOswal.com); +91 22 6129 1530

Sagar Lele

(Sagar.Lele@MotilalOswal.com); +91 22 6129 1531

2 February 2017

26

Union Budget FY17-18

Comparative valuation

Sector / Companies

Technology

Cyient

HCL Technologies

Hexaware Tech.

Infosys

KPIT Tech.

L&T Infotech

Mindtree

MphasiS

NIIT Tech.

Persistent Systems

TCS

Tata Elxsi

Tech Mahindra

Zensar Tech

Wipro

Sector Aggregate

CMP

(INR)

452

814

189

917

130

665

457

564

408

587

2,169

1,449

449

892

455

RECO

EPS (INR)

PE (x)

EV/EBIDTA (x)

ROE (%)

FY17E FY18E FY19E FY17E FY18E FY19E FY17E FY18E FY19E FY17E FY18E FY19E

33.4 42.7 46.5

58.1 64.7 70.2

13.6 15.5 15.9

62.8 67.8 74.4

11.7 13.8 15.3

54.2 57.5 62.3

25.1 33.7 38.1

42.0 42.5 44.7

38.2 49.3 51.9

38.9 46.2 52.6

135.2 145.3 158.4

59.3 72.1 89.0

32.5 36.6 41.2

68.6 85.0 93.3

33.4 37.2 41.7

13.6

14.0

13.9

14.6

11.1

12.3

18.2

13.4

10.7

15.1

16.0

24.4

13.8

13.0

13.6

15.0

10.6

12.6

12.2

13.5

9.4

11.6

13.6

13.3

8.3

12.7

14.9

20.1

12.2

10.5

12.2

13.7

9.7

11.6

11.9

12.3

8.5

10.7

12.0

12.6

7.9

11.2

13.7

16.3

10.9

9.6

10.9

12.5

8.5

9.9

9.7

9.0

5.2

8.9

10.8

12.5

4.4

8.4

12.0

14.3

9.6

8.3

9.2

10.4

6.7

8.5

7.9

7.8

3.6

8.1

8.8

10.9

3.7

6.6

10.5

11.6

7.8

6.5

7.8

8.9

5.6

7.5

7.3

7.0

2.7

7.3

7.7

9.9

3.2

5.8

9.4

9.1

6.5

5.3

6.9

7.9

15.9

27.3

27.7

23.2

14.0

41.8

17.1

13.8

14.2

17.5

33.8

42.5

20.1

20.0

17.0

23.7

17.8

26.7

27.5

22.5

15.9

36.2

21.0

14.7

16.5

18.9

31.1

41.3

20.0

21.1

17.0

22.8

17.1

25.7

24.0

22.3

15.1

32.8

21.1

14.6

15.5

20.6

29.0

40.8

19.6

19.8

17.3

22.1

Buy

Buy

Neutral

Buy

Neutral

Buy

Neutral

Neutral

Neutral

Neutral

Neutral

Buy

Buy

Buy

Neutral

2 February 2017

27