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States’ spending increases in 2QFY20, leading to wider deficit
Spending growth in 2HFY20 could be less than half of the target
20 November 2019
The Economy Observer
Based on the monthly finances data available for 18 major states (accounting for ~90% of all states’ spending), we note
that their fiscal deficit was at 37.6% of budget estimates (BEs) in 1HFY20, much higher than 31.8% in the corresponding
period last year. Tax receipts grew at a decadal low of only 2.4% YoY in 1HFY20, while total spending increased at 8.7%.
Within total spending, revenue spending was up by 9.3% and capital spending by 4.5% YoY during the same period.
After growing at a muted 1.4% YoY in 1QFY20, states’ aggregate tax receipts increased 3.4% YoY in 2QFY20. Non-tax
receipts – especially grants-in-aid from the central government – were up sharply, due to which total receipts of the 18
states increased at a four-quarter highest pace of 12.5% YoY in 2QFY20, as against a decline of 2% in the prior quarter.
Consequently, total receipts increased 5.5% YoY in 1HFY20 and accounted for only 38.8% of BEs – the lowest in five years.
In contrast to the marginal decline in 1QFY20, states’ spending increased at a strong 16.6% YoY in 2QFY20. Both revenue
and capital spending grew reasonably in 2QFY20. Total spending was 38.6% of BEs in 1HFY20, with capital spending at
30.7% and revenue spending at ~40% of BEs in 1HFY20.
Since the center has guaranteed ~14% growth in tax collection for states by 2021-22, it might very likely have to offset
lower growth in tax receipts of states in FY20 and thus face additional burden on finances. Therefore, while the shortfall
in states’ receipts would be lower than otherwise, tax collection of the general government could be lower by as much as
INR3.7t (or 1.7% of GDP). If so, the unchanged deficit target implies that fiscal spending growth could be only ~13% in
2HFY20
versus
the target of ~28%.
In this note, we assess the finances of 18 state governments – Andhra Pradesh (AP),
Chhattisgarh (CT), Gujarat (GJ), Haryana (HR), Himachal Pradesh (HP), Jharkhand
(JH), Karnataka (KA), Kerala (KL), Madhya Pradesh (MP), Maharashtra (MH), Odisha
(OD), Punjab (PB), Rajasthan (RJ), Telangana (TS), Tamil Nadu (TN), Uttar Pradesh
(UP), Uttarakhand (UK) and West Bengal (WB).
Aggregate fiscal deficit of
the general government
was 73.5% of BEs in 1HFY20
– the highest in three years
and the second highest in a
decade.
Fiscal deficit of states at 37.6% of BEs in 1HFY20…:
The fiscal deficit of the 18 states
stood at 37.6% of BEs in 1HFY20, much higher than 31.8% in 1HFY19 but slightly
lower than the average of 39% during the corresponding period in the last three
years
(Exhibit 1).
Combining the center’s finances with the 18 states, the aggregate
fiscal deficit of the general government (GG) stood at 72.8% of BEs in 1HFY20 – the
highest in three years and the second highest in a decade barring FY17 (Exhibit
2).
Exhibit 2: …because of which the general government’s
fiscal deficit was 73.5% of BEs in 1HFY20
(% of BEs)
92.6
76.1 69.2 71.5 72.8
70.2
57.2
56.8 54.8 60.8
Fiscal defict of GG
Exhibit 1: States’ fiscal deficit increases in 1HFY20, along
with that of the center…
(% of BEs)
Center
91.3
States
95.3
82.6
68.1
33.5
83.9
45.9
31.4
39.4
31.8
37.6
33.2
Data for 1H of respective years
Source: Comptroller and Auditor General (CAG), Controller General
of Accounts (CGA), Budget documents, CEIC, MOFSL
Nikhil Gupta – Research Analyst
(Nikhil.Gupta@MotilalOswal.com); +91 22 6129 1555
Yaswi Agarwal
– Research Analyst
(Yaswi.Agarwal@motilaloswal.com); +91 22 7193 4196
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.
 Motilal Oswal Financial Services
Exhibit 3: State-wise details of tax collections, revenue expenditure, capital expenditure and fiscal deficit
(INR b)
Andhra Pradesh (AP)
Chhattisgarh (CG)
Gujarat (GJ)
Haryana (HR)
Himachal Pradesh (HP)
Jharkhand (JH)
Karnataka (KA)
Kerala (KL)
Madhya Pradesh (MP)
Maharashtra (MH)
Odisha (OR)
Punjab (PB)
Rajasthan (RJ)
Telangana (TS)
Tamil Nadu (TN)
Uttar Pradesh (UP)
Uttarakhand (UK)
West Bengal (WB)
18 states
Central government
General Government*
*Center+18 states
Tax collection
1HFY19
1HFY20
421
199
502
251
57
166
618
311
463
1,045
290
190
441
381
637
1,162
91
374
7,599
5,828
13,426
419
195
489
252
59
182
649
319
461
1,044
294
183
448
376
649
1,155
92
517
7,783
6,074
13,857
Revenue spending
1HFY19
1HFY20
650
294
546
321
132
204
699
543
711
1,033
342
304
735
469
895
1,234
146
657
9,917
11,416
21,333
609
359
632
372
139
248
759
548
704
1,257
449
321
779
482
960
1,342
154
729
10,843
13,011
23,854
Capital spending
1HFY19
1HFY20
149
39
113
58
14
51
98
39
123
79
111
14
109
146
75
196
22
45
1,482
1,626
3,108
84
32
107
119
17
57
129
49
141
117
70
15
80
109
121
215
17
69
1,549
1,875
3,425
Fiscal deficit
1HFY19
1HFY20
231
65
5
66
(2)
(1)
37
181
183
(148)
(1)
75
180
153
186
(47)
31
230
1,425
5,947
7,373
167
96
40
111
(0)
13
46
181
215
(4)
28
66
175
147
200
219
19
146
1,865
6,516
8,380
Source: CAG, SFMs, CGA, MOFSL
Only two states –
Maharashtra (MH) and
Himachal Pradesh (HP) –
ran a fiscal surplus in
1HFY20.
A look at the finances of the individual states shows that only two states –
Maharashtra (MH) and Himachal Pradesh (HP) – ran a fiscal surplus in 1HFY20.
However, the surplus in both these states was much lower than that in 1HFY19. All
the other 16 states had a fiscal deficit in 1HFY20. The fiscal deficit in Chhattisgarh
(CT) has already reached 88.4% of BEs, while it was about two thirds of BEs in Kerala
(KL) and Madhya Pradesh (MP) (Exhibit
4).
A comparison of the fiscal deficit of the
individual states in 1HFY20 with that in 1HFY19 suggests that the fiscal deficit has
increased in 9 of the 16 states (CT, GJ, HR, JH, KA, OR, TS, TN and UP) but improved
in other states (AP, KL, MP, PB, RJ, UK and WB). Further, JH, OR and UP have turned
from a surplus in 1HFY19 to a deficit in 1HFY20, while the fiscal surplus in MH has
fallen to negligible in 1HFY20 from 29% of BEs in the corresponding period last year.
Exhibit 4: Fiscal deficit of individual states in 1HFY20 vis-à-vis 1HFY19 (% of BE)
(% of BE)
FY20# fiscal deficit
FY19# fiscal deficit
47
88
13
49
(0)
19
11
69
67
(1)
15
33
53
61
45
28
47
54
AP
CT
GJ
HR
HP
JH
KA
KL
MP MH OR
PB
RJ
TS
TN
UK
UP WB
Source: CAG, State finance ministries (SFMs), MOFSL
20 November 2019
2
 Motilal Oswal Financial Services
After declining for the first
time in at least eight years
in 1QFY20, total receipts of
the 18 states increased
12.5% YoY in 2QFY20,
primarily driven by non-tax
receipts.
Strong growth in non-tax receipts in 2QFY20 helped total receipts to grow 5.5%
YoY in 1HFY20…:
After declining for the first time in at least eight years in 1QFY20
(since the availability of monthly data), total receipts of the 18 states increased
12.5% YoY in 2QFY20. Nevertheless, this reasonably decent increase in total receipts
was primarily driven by non-tax receipts
(Exhibit 5).
Tax collection for the 18 states
were up by 3.4% YoY in 2QFY20, following record-low growth of only 1.4% in
1QFY20. Within non-tax receipts, grants-in-aid from the central government
increased 47.4% YoY in 2QFY20 vis-à-vis a 9.7% decline in 1QFY20.
A comparison of total receipts of the individual states in 1HFY20 with those in
1HFY19 suggests that total receipts improved in only 8 of the 18 states (CT, HR, JH,
KA, TS, TN, UK and WB) but weakened in all other states
(Exhibit 6).
Total receipts
ranged between 29% and 46% of BEs for these states, with the lowest receipts in PB,
and the highest collection (vis-à-vis BEs) in HP and KA. Receipts growth in 1HFY20
weakened massively in AP and UP, while it improved the most in TS and WB.
Exhibit 5: Total receipts of states grew much faster than tax
receipts in 2QFY20
24
16
8
0
(8)
Sep-16
Total receipts
(% YoY)
Tax receipts
Exhibit 6: Total receipts of individual states in 1HFY20 vis-à-
vis 1HFY19 (% of BE)
(% of BE)
FY20# total receipts
FY19# total receipts
29
37
46
45 42 46
44 43
39
36 35
29
43 39
40
38 39
34
Mar-17
Sep-17
Mar-18
Sep-18
Mar-19
Sep-19
AP CT GJ HR HP JH KA KL MPMH OR PB RJ TS TN UK UP WB
# First half only
Source: CAG, CGA, SFMs, MOFSL
…resulting in better growth in total receipts of the general government in 2QFY20:
Better growth in 2QFY20 led to states’ total receipts increasing at 5.5% YoY in
1HFY20, amounting to 38.8% of BEs. This was the slowest growth during the
corresponding period in the past decade
(Exhibit 7).
Just like states, total receipts of the central government also increased much faster
at 27% YoY in 2QFY20 vis-à-vis 4% YoY in 1QFY20. And again like for states, it was
supported by non-tax receipts (especially one-time special dividends from the
Reserve Bank of India in Aug’19). Note that tax receipts of the center increased at
only 3% YoY in 2QFY20 – slower than 6% in 1QFY20.
Total receipts of the general
government grew 19.1%
YoY in 2QFY20 – marking
the fastest growth in five
quarters and as against
negligible growth in the first
quarter.
Consequently, total receipts of the general government (center + 18 states)
increased 19.1% YoY in 2QFY20 – marking the fastest growth in five quarters and as
against negligible growth in 1QFY20
(Exhibit 7).
Total taxes grew only 3.2% YoY in
2QFY20, same as that in 1QFY20, while non-tax receipts grew much faster. Overall,
better growth in 2QFY20 led to an increase of 10.7% YoY in total receipts in 1HFY20,
marking the slowest growth in three years. As a percentage of BEs, GG total receipts
were 41.5% of BEs in 1HFY20, the lowest in the past five years
(Exhibit 8).
20 November 2019
3
 Motilal Oswal Financial Services
Exhibit 7: Total receipts of states grew 5.5% in 1HFY20…
Total receipts of 18 states
16.0
11.5
13.2
8.7
5.5
40.1
FY14
38.3
FY15
39.7
FY16
38.6
FY17
38.8
FY18
40.3
FY19
38.8
FY20
12.8
% of BE
% YoY
17.2
Exhibit 8: …resulting in ~11% growth in GG total receipts
Total receipts of GG
18.3
% of BE
% YoY
11.4
12.0
8.8
12.5
13.7
10.7
40.8
FY14
40.1
FY15
43.5
FY16
41.8
FY17
42.2
FY18
42.6
FY19
41.5
FY20
Data for Apr-Sep (1H) only for respective years
Source: CAG, CGA, SFMs, MOFSL
With better receipts in
2QFY20, total spending of
the 18 states increased
16.6% YoY in 2QFY20, as
against a marginal decline
of 0.2% YoY in 1QFY20.
States’ spending grew faster in 2QFY20…:
With better receipts in 2QFY20, total
spending of the 18 states increased 16.6% YoY in 2QFY20, as against a marginal
decline of 0.2% YoY in 1QFY20. Consequently, total spending of the states grew 8.7%
YoY in 1HFY20, weaker than 12.7% a year ago but better than 7.5% in 1HFY18. Not
surprisingly then, total spending of states was 22% of BEs in 2QFY20 and 38.6% in
1HFY20
(Exhibit 9).
Exhibit 10: …but there was a huge variation among states
(% of BE)
FY20# total spending
FY19# total spending
Exhibit 9: Total spending of states grew faster in 2QFY20…
Total spending of states
15.7
10.1
7.2
3.4
4.9
(0.2)
31.3
Mar-18
18.3
20.7
Sep-18
21.4
30.9
Mar-19
16.6
22.0
Sep-19
% of BE
15.0
10.8
% YoY
16.6
32
43 40 44
38 37 40 42 39 36 39
29
42
40 43 44 37
35
21.1
Sep-17
20.9
AP CT GJ HR HP JH KA KL MPMH OR PB RJ TS TN UK UP WB
Source: CAG, CGA, SFMs, MOFSL
A comparison of total spending of the individual states in 1HFY20 with that in
1HFY19 suggests that total spending as a percentage of BEs increased in 9 out of the
18 states (CT, GJ, HR, JH, KA, MH, TS, TN and WB)
(Exhibit 10).
Total spending ranged
between 29% and 44% of BEs for these states, with lowest spending in PB (in line
with very weak receipts) and highest spending (vis-à-vis BEs) in HR and TN. Spending
growth in 1HFY20 weakened massively in AP but improved the most in HR and TS.
Both revenue and capital
spending grew decently in
2QFY20, with the former
growing at the fastest pace
(of 16.7%) in 13 quarters.
…with broad-based rapid growth:
Both revenue and capital spending grew decently
in 2QFY20, with the former growing at the fastest pace (of 16.7%) in 13 quarters.
Accordingly, while revenue spending grew 9.3% YoY in 1HFY20, capital spending
increased at 4.5% YoY – as a percentage of BEs, they were at 40% and ~31%,
respectively, in 1HFY20
(Exhibit 11).
Spending of general government up 22.5% YoY in 2QFY20…:
Total spending of the
central government increased even faster than the states in 2QFY20 – at nine-year
high of 28.6% YoY – following a tepid rise of only 2% in the previous quarter.
20 November 2019
4
 Motilal Oswal Financial Services
Center’s spending thus was up 14.1% YoY in 1HFY20 – the fastest in six years.
Further, capital spending of the center grew much faster than its revenue spending
in 2QFY20, due to which the former posted growth of 15.3% in 1HFY20, slightly
higher than 14% in the latter.
Total spending of the
general government grew
at least at eight-year
highest pace of 22.5% YoY
in 2QFY20, following 1%
growth in 1QFY20.
Consequently, total spending of the general government (center + 18 states) grew at
least at eight-year highest pace of 22.5% YoY in 2QFY20, following very low growth
of 1% in the previous quarter. Total spending grew 11.6% YoY in 1HFY20, slightly
lower than 13.1% a year ago
(Exhibit 12).
As a percentage of BEs, total spending of
the general government was 47.8% of BEs in 1HFY20, slightly lower than the average
of 48.5% during the corresponding period in the past three years.
Exhibit 12: Total spending of the general government grew
decently in 1HFY20
Total spending of GG
13.5
13.9
8.5
9.7
% of BE
15.9
13.1
11.6
% YoY
Exhibit 11: Both revenue and capital spending of states grew
faster in 2QFY20
Revenue spending
60
40
20
0
(20)
(40)
Sep-16 Mar-17 Sep-17 Mar-18 Sep-18 Mar-19 Sep-19
Source: CAG, SFMs, MOFSL
(% YoY)
Capital outlay
45.7
FY14
46.9
FY15
46.6
FY16
48.9
FY17
47.9
FY18
48.5
FY19
47.8
FY20
Data for Center + 18 states for April-September of respective years
…with faster growth in capital spending:
Within total spending of the general
government, capital spending grew ~40% YoY in 2QFY20, while revenue spending
growth was at a 13-quarter high of 20%. Accordingly, while the former grew 11.8%
YoY in 1HFY20 (because of a very sharp decline in 1QFY20), the latter increased
~10% in 1HFY20. As a percentage of BEs, aggregate capital spending of the center
and states was 42% of BEs in 1HFY20, while revenue spending was at a four-year low
of 48.8%.
20 November 2019
5
 Motilal Oswal Financial Services
Total spending of the
general government, thus,
grew at fastest pace at least
since FY13 (when monthly
data became available) in
2QFY20.
Conclusion: Fiscal spending brightest spot in 2QFY20, but massive tax shortfall
would restrict fiscal support in 2HFY20
Strong spending growth by the central government in 2QFY20 is well known;
however, our analysis of the 18 states (together accounts for ~90% of all states)
reveals their aggregate spending also grew as strongly in 2QFY20 following a
marginal decline in the previous quarter. Total spending of GG, thus, grew at the
fastest pace at least since FY13 (when monthly data became available) in 2QFY20.
This was certainly one of the brightest spots in the otherwise bleak 2QFY20.
Such strong spending growth, nevertheless, is unlikely to continue in 2HFY20. This is
because the combined fiscal deficit of GG has already reached ~73% of BEs in
1HFY20, the second-highest in a decade, as total receipts grew slowly than total
spending
(Exhibit 2 above).
Since the break-up of states’ taxes into own tax receipts
(OTR) and devolution received from the center are not available on a monthly basis,
it is difficult to comment on the actual tax growth in the economy.
Unchanged deficit target
implies that fiscal spending
growth could be only ~13%
in 2HFY20, less than half of
the target of ~28% growth
in 2HFY20.
However, since the center has guaranteed ~14% growth in tax collection for states
by 2021-22, it might very likely have to offset lower growth in tax receipts of states
in FY20 and thus face additional burden on finances. Therefore, while the shortfall in
states’ receipts would be lower than otherwise, tax collection of the general
government could be lower by as much as INR3.7t (or 1.7% of GDP). If so, the
unchanged deficit target implies that fiscal spending growth could be only ~13% in
2HFY20
versus
the target of ~28%.
Just like spending growth picked up in 2QFY20 after an extremely weak 1QFY20, it is
highly likely that 3Q would be much weaker but 4QFY20 much better. Overall, after
coming in at a reasonable level of ~11.5% YoY in 1HFY20, spending growth will likely
be average in the second half and certainly much lower than what the governments
have targeted.
20 November 2019
6
 Motilal Oswal Financial Services
Appendix
Exhibit 13: State-wise details of growth in tax collections, revenue expenditure and capital expenditure (% YoY)#
(% YoY)
Andhra Pradesh (AP)
Chhattisgarh (CT)
Gujarat (GJ)
Haryana (HR)
Himachal Pradesh (HP)
Jharkhand (JH)
Karnataka (KA)
Kerala (KL)
Madhya Pradesh (MP)
Maharashtra (MH)
Odisha (OR)
Punjab (PB)
Rajasthan (RJ)
Tamil Nadu (TN)
Telengana (TR)
Uttarakhand (UK)
Uttar Pradesh (UP)
West Bengal (WB)
18 state governments
Central government
General Government*
# April-September period
Tax collection
FY19
FY20
24.7
(0.5)
10.1
12.6
4.6
7.9
19.2
8.5
11.1
7.8
14.5
6.0
2.0
16.4
20.8
19.0
14.9
21.7
0.8
13.7
7.5
10.9
(2.2)
(2.7)
0.4
2.8
9.6
5.0
2.7
(0.3)
(0.1)
1.4
(3.8)
1.5
(1.3)
2.0
0.8
(0.6)
38.3
2.4
4.2
3.2
Core revenue spending
FY19
FY20
4.0
(7.6)
15.1
2.4
(0.6)
12.1
(12.0)
3.8
7.7
22.6
9.5
4.9
20.9
40.2
9.6
16.7
14.7
12.5
12.1
11.5
14.0
12.8
21.4
15.7
20.2
5.8
18.1
7.2
(1.1)
(2.5)
25.8
32.2
1.4
5.1
5.3
6.9
4.2
5.4
7.1
8.6
16.3
12.5
Capital spending
FY19
FY20
32.5
(43.4)
11.1
31.6
34.3
9.3
(5.3)
21.7
12.2
5.2
(21.1)
20.0
10.5
67.1
7.5
0.1
(18.1)
164.0
(0.6)
23.1
11.1
16.5
(18.3)
(5.1)
105.8
24.3
11.0
31.5
24.7
15.2
48.8
(37.5)
3.9
(26.3)
(25.5)
61.9
(22.7)
9.9
51.2
4.5
15.3
10.2
*Center+16 states
Source: CAG, SFMs, CGA, MOFSL
20 November 2019
7
 Motilal Oswal Financial Services
NOTES
20 November 2019
8
 Motilal Oswal Financial Services
*In
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days take appropriate measures to make the recommendation consistent with the investment rating legend.
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MOFSL and it’s associates have not received any compensation or other benefits from the subject company or third party in connection with the research report. To enhance transparency,
MOFSL has incorporated a Disclosure of Interest Statement in this document. This should, however, not be treated as endorsement of the views expressed in the report. MOFSL and / or its
affiliates do and seek to do business including investment banking with companies covered in its research reports. As a result, the recipients of this report should be aware that MOFSL may
have a potential conflict of interest that may affect the objectivity of this report. Compensation of Research Analysts is not based on any specific merchant banking, investment banking or
brokerage service transactions. Above disclosures include beneficial holdings lying in demat account of MOFSL which are opened for proprietary investments only. While calculating beneficial
holdings, It does not consider demat accounts which are opened in name of MOFSL for other purposes (i.e holding client securities, collaterals, error trades etc.). MOFSL also earns DP income
from clients which are not considered in above disclosures. Above disclosures include beneficial holdings lying in demat account of MOFSL which are opened for proprietary investments only.
While calculating beneficial holdings, It does not consider demat accounts which are opened in name of MOFSL for other purposes (i.e holding client securities, collaterals, error trades etc.).
MOFSL also earns DP income from clients which are not considered in above disclosures.
Terms & Conditions:
This report has been prepared by MOFSL and is meant for sole use by the recipient and not for circulation. The report and information contained herein is strictly confidential and may not be
altered in any way, transmitted to, copied or distributed, in part or in whole, to any other person or to the media or reproduced in any form, without prior written consent of MOFSL. The report is
based on the facts, figures and information that are considered true, correct, reliable and accurate. The intent of this report is not recommendatory in nature. The information is obtained from
publicly available media or other sources believed to be reliable. Such information has not been independently verified and no guaranty, representation of warranty, express or implied, is made
as to its accuracy, completeness or correctness. All such information and opinions are subject to change without notice. The report is prepared solely for informational purpose and does not
constitute an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial instruments for the clients. Though disseminated to all the customers
simultaneously, not all customers may receive this report at the same time. MOFSL will not treat recipients as customers by virtue of their receiving this report.
Analyst Certification
The views expressed in this research report accurately reflect the personal views of the analyst(s) about the subject securities or issues, and no part of the compensation of the research
analyst(s) was, is, or will be directly or indirectly related to the specific recommendations and views expressed by research analyst(s) in this report.
Disclosure of Interest Statement
Companies where there is interest
Analyst ownership of the stock
No
A graph of daily closing prices of securities is available at
www.nseindia.com, www.bseindia.com.
Research Analyst views on Subject Company may vary based on Fundamental research and
Technical Research. Proprietary trading desk of MOFSL or its associates maintains arm’s length distance with Research Team as all the activities are segregated from MOFSL research activity
and therefore it can have an independent view with regards to subject company for which Research Team have expressed their views.
Regional Disclosures (outside India)
This report is not directed or intended for distribution to or use by any person or entity resident in a state, country or any jurisdiction, where such distribution, publication, availability or use
would be contrary to law, regulation or which would subject MOFSL & its group companies to registration or licensing requirements within such jurisdictions.
For Hong Kong:
This report is distributed in Hong Kong by Motilal Oswal capital Markets (Hong Kong) Private Limited, a licensed corporation (CE AYY-301) licensed and regulated by the Hong Kong Securities
and Futures Commission (SFC) pursuant to the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) “SFO”. As per SEBI (Research Analyst Regulations) 2014 Motilal
Oswal Financial Services Limited(SEBI Reg No. INH000000412) has an agreement with Motilal Oswal capital Markets (Hong Kong) Private Limited for distribution of research report in Hong
Kong. This report is intended for distribution only to “Professional Investors” as defined in Part I of Schedule 1 to SFO. Any investment or investment activity to which this document relates is
only available to professional investor and will be engaged only with professional investors.” Nothing here is an offer or solicitation of these securities, products and services in any jurisdiction
where their offer or sale is not qualified or exempt from registration. The Indian Analyst(s) who compile this report is/are not located in Hong Kong & are not conducting Research Analysis in
Hong Kong.
Explanation of Investment Rating
Investment Rating
BUY
SELL
NEUTRAL
UNDER REVIEW
NOT RATED
Expected return (over 12-month)
>=15%
< - 10%
> - 10 % to 15%
Rating may undergo a change
We have forward looking estimates for the stock but we refrain from assigning recommendation
20 November 2019
9
 Motilal Oswal Financial Services
For U.S:
Motilal Oswal Financial Services Limited (MOFSL) is not a registered broker - dealer under the U.S. Securities Exchange Act of 1934, as amended (the"1934 act") and under applicable state
laws in the United States. In addition MOFSL is not a registered investment adviser under the U.S. Investment Advisers Act of 1940, as amended (the "Advisers Act" and together with the 1934
Act, the "Acts), and under applicable state laws in the United States. Accordingly, in the absence of specific exemption under the Acts, any brokerage and investment services provided by
MOFSL, including the products and services described herein are not available to or intended for U.S. persons. This report is intended for distribution only to "Major Institutional Investors" as
defined by Rule 15a-6(b)(4) of the Exchange Act and interpretations thereof by SEC (henceforth referred to as "major institutional investors"). This document must not be acted on or relied on
by persons who are not major institutional investors. Any investment or investment activity to which this document relates is only available to major institutional investors and will be engaged in
only with major institutional investors. In reliance on the exemption from registration provided by Rule 15a-6 of the U.S. Securities Exchange Act of 1934, as amended (the "Exchange Act") and
interpretations thereof by the U.S. Securities and Exchange Commission ("SEC") in order to conduct business with Institutional Investors based in the U.S., MOFSL has entered into a
chaperoning agreement with a U.S. registered broker-dealer, Motilal Oswal Securities International Private Limited. ("MOSIPL"). Any business interaction pursuant to this report will have to be
executed within the provisions of this chaperoning agreement.
The Research Analysts contributing to the report may not be registered /qualified as research analyst with FINRA. Such research analyst may not be associated persons of the U.S. registered
broker-dealer, MOSIPL, and therefore, may not be subject to NASD rule 2711 and NYSE Rule 472 restrictions on communication with a subject company, public appearances and trading
securities held by a research analyst account.
For Singapore:
In Singapore, this report is being distributed by Motilal Oswal Capital Markets Singapore Pte Ltd (“MOCMSPL”) (Co.Reg. NO. 201129401Z) which is a holder of a capital markets services
license and an exempt financial adviser in Singapore,
as per the approved agreement under Paragraph 9 of Third Schedule of Securities and Futures Act (CAP 289) and Paragraph 11 of First Schedule of Financial Advisors Act (CAP 110)
provided to MOCMSPL by Monetary Authority of Singapore. Persons in Singapore should contact MOCMSPL in respect of any matter arising from, or in connection with this
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as defined in section 4A(1) of the Securities and Futures Act, Chapter 289 of Singapore (“the SFA”). Accordingly, if a Singapore person is not or ceases to be such an institutional investor, such
Singapore Person must immediately discontinue any use of this Report and inform MOCMSPL.
Disclaimer:
The report and information contained herein is strictly confidential and meant solely for the selected recipient and may not be altered in any way, transmitted to, copied or
distributed, in part or in whole, to any other person or to the media or reproduced in any form, without prior written consent. This report and information herein is solely for informational purpose
and may not be used or considered as an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial instruments. Nothing in this report constitutes
investment, legal, accounting and tax advice or a representation that any investment or strategy is suitable or appropriate to your specific circumstances. The securities discussed and opinions
expressed in this report may not be suitable for all investors, who must make their own investment decisions, based on their own investment objectives, financial positions and needs of specific
recipient. This may not be taken in substitution for the exercise of independent judgment by any recipient. Each recipient of this document should make such investigations as it deems
necessary to arrive at an independent evaluation of an investment in the securities of companies referred to in this document (including the merits and risks involved), and should consult its
own advisors to determine the merits and risks of such an investment. The investment discussed or views expressed may not be suitable for all investors. Certain transactions -including those
involving futures, options, another derivative products as well as non-investment grade securities - involve substantial risk and are not suitable for all investors. No representation or warranty,
express or implied, is made as to the accuracy, completeness or fairness of the information and opinions contained in this document. The Disclosures of Interest Statement incorporated in this
document is provided solely to enhance the transparency and should not be treated as endorsement of the views expressed in the report. This information is subject to change without any prior
notice. The Company reserves the right to make modifications and alternations to this statement as may be required from time to time without any prior approval. MOFSL, its associates, their
directors and the employees may from time to time, effect or have effected an own account transaction in, or deal as principal or agent in or for the securities mentioned in this document. They
may perform or seek to perform investment banking or other services for, or solicit investment banking or other business from, any company referred to in this report. Each of these entities
functions as a separate, distinct and independent of each other. The recipient should take this into account before interpreting the document. This report has been prepared on the basis of
information that is already available in publicly accessible media or developed through analysis of MOFSL. The views expressed are those of the analyst, and the Company may or may not
subscribe to all the views expressed therein. This document is being supplied to you solely for your information and may not be reproduced, redistributed or passed on, directly or indirectly, to
any other person or published, copied, in whole or in part, for any purpose. This report is not directed or intended for distribution to, or use by, any person or entity who is a citizen or resident of
or located in any locality, state, country or other jurisdiction, where such distribution, publication, availability or use would be contrary to law, regulation or which would subject MOFSL to any
registration or licensing requirement within such jurisdiction. The securities described herein may or may not be eligible for sale in all jurisdictions or to certain category of investors. Persons in
whose possession this document may come are required to inform themselves of and to observe such restriction. Neither the Firm, not its directors, employees, agents or representatives shall
be liable for any damages whether direct or indirect, incidental, special or consequential including lost revenue or lost profits that may arise from or in connection with the use of the information.
The person accessing this information specifically agrees to exempt MOFSL or any of its affiliates or employees from, any and all responsibility/liability arising from such misuse and agrees not
to hold MOFSL or any of its affiliates or employees responsible for any such misuse and further agrees to hold MOFSL or any of its affiliates or employees free and harmless from all losses,
costs, damages, expenses that may be suffered by the person accessing this information due to any errors and delays.
Registered Office Address: Motilal Oswal Tower, Rahimtullah Sayani Road, Opposite Parel ST Depot, Prabhadevi, Mumbai-400025; Tel No.: 022 71934200/ 022-71934263; Website
www.motilaloswal.com.
CIN No.: L67190MH2005PLC153397.Correspondence Office Address: Palm Spring Centre, 2nd Floor, Palm Court Complex, New Link Road, Malad(West), Mumbai- 400 064. Tel No: 022
7188 1000.
Registration Nos.: Motilal Oswal Financial Services Limited (MOFSL)*: INZ000158836(BSE/NSE/MCX/NCDEX); CDSL and NSDL: IN-DP-16-2015; Research Analyst: INH000000412. AMFI:
ARN - 146822; Investment Adviser: INA000007100; Insurance Corporate Agent: CA0579 ;PMS:INP000006712. Motilal Oswal Asset Management Company Ltd. (MOAMC): PMS (Registration
No.: INP000000670); PMS and Mutual Funds are offered through MOAMC which is group company of MOFSL. Motilal Oswal Wealth Management Ltd. (MOWML): PMS (Registration No.:
INP000004409) is offered through MOWML, which is a group company of MOFSL. Motilal Oswal Financial Services Limited is a distributor of Mutual Funds, PMS, Fixed Deposit, Bond,
NCDs,Insurance Products and IPOs.Real Estate is offered through Motilal Oswal Real Estate Investment Advisors II Pvt. Ltd. which is a group company of MOFSL. Private Equity is offered
through Motilal Oswal Private Equity Investment Advisors Pvt. Ltd which is a group company of MOFSL. Research & Advisory services is backed by proper research. Please read the Risk
Disclosure Document prescribed by the Stock Exchanges carefully before investing. There is no assurance or guarantee of the returns. Investment in securities market is subject to market risk,
read all the related documents carefully before investing. Details of Compliance Officer: Name: Neeraj Agarwal, Email ID: na@motilaloswal.com, Contact No.:022-71881085.
* MOFSL has been amalgamated with Motilal Oswal Financial Services Limited (MOFSL) w.e.f August 21, 2018 pursuant to order dated July 30, 2018 issued by Hon'ble National Company
Law Tribunal, Mumbai Bench.
20 November 2019
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