E
CO
S
COPE
A subdued start to 2020
Economic activity growth at three-month low in Jan’20
3 March 2020
The Economy Observer
Our in-house Economic Activity Index (EAI) for India’s real GVA (called EAI-GVA) suggests that economic growth
weakened from ~6% YoY in Nov/Dec’19 to 5.1% YoY in Jan’20 – lowest in past three months. The deceleration can be
attributed to a high base and a weak services sector led by a decline in fiscal spending.
EAI-GDP growth also came in at a 10-month low of 2.4% YoY in Jan’20, as against average growth of 5% YoY in 2HCY19.
Although investments are expected to have grown for the first time in eight months in Jan’20, weak consumption
activity led by fiscal spending dragged EAI-GDP growth.
Overall, while 2020 was expected to begin well led by 7-8 year high PMI indices, actual data confirm that economic
growth was at a three-month low in Jan’20. Further, since fiscal spending is expected to remain weak in Feb-Mar’20 as
the government attempts to meet its FY20RE deficit target, a recovery in 4QFY20 appears difficult. Consequently, we
believe that real GDP growth would be ~4.5% in 4QFY20 – similar to 4.7% in 3QFY20, implying ~5% growth in FY20.
Preliminary estimates
reveal that India’s EAI for
real GVA grew at 5.1% YoY
in Jan’20 – slowest in three
months.
Although investments are
expected to grow for the
first time in eight months, a
decline in fiscal spending
led to very weak growth in
consumption spending.
EAI-GVA growth weakens in Jan’20…:
Preliminary estimates reveal that India’s
EAI for real GVA grew at 5.1% YoY in Jan’20 – slowest in three months and
versus ~6% growth in Nov/Dec’19
(Exhibit 1).
Deceleration in EAI-GVA was due
to the high base and the weak services sector led by the first decline in fiscal
spending in seven months and faster decline in passenger traffic. Industrial
sector, on the other hand, grew faster in Jan’20, helped by a broad-based
improvement in manufacturing, power and construction
(Exhibit 2).
…along with subdued growth in EAI-GDP:
EAI-GDP growth also deteriorated
from an average of 5% YoY in 2HCY19 to a 10-month low of 2.4% in Jan’20
(Exhibit 3).
Although investments are expected to grow for the first time in eight
months, a decline in fiscal spending led to very weak growth in consumption
spending, which dragged EAI-GDP growth
(Exhibit 4).
Further, with an
improvement in investments and stable private consumption growth, external
trade subtracted from economic growth as the decline in imports was slower
than that in exports in Jan’20.
Exhibit 2: …led primarily by weak services sector
(pp)
6.4
5.7
3.6
4.0
4.8
4.5
3.6
4.3
Agri
Industry
5.8
Services
5.8
EAI-GVA
5.0
Exhibit 1: EAI-GVA growth at three-month low in Jan’20…
6.8 6.5
6.2
6.2
% YoY
3MMA
EAI-GVA
5.7 5.4 5.8 5.5
5.1
3.1
1.2
0.7
Jan-20
6.7 7.5 5.3 5.9 5.8 4.4 7.1 4.9 3.4 2.5 6.0 5.9 5.1
Jan-19
Apr-19
Jul-19
Oct-19
Jan-20
1.5
0.4
Jan-19
1.6
0.6
Nov-19
0.6
0.9
Dec-19
Please refer to our earlier
report
for details
Contribution of different components to EAI-GVA growth
Source: Various national sources, 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: India’s EAI grew only 2.4% YoY in Jan’20…
% YoY
6.3
5.1
4.4
3.3
2.9
4.9
4.5 4.6 4.7 4.2
5.3
4.4
3-mma
EAI-GDP
Exhibit 4: …due to very weak growth in consumption
(pp)
0.3
7.6
Consumption
Net exports
6.4
2.5
4.8
(0.9)
Jan-19
Nov-19
4.4
1.3
4.5
(1.4)
Dec-19
Jan-20
0.3
Investment
EAI-GDP
0.1
7.2
3.7
2.4
2.1
7.6 5.0 0.6 4.3 3.8 2.8 6.8 4.2 3.2 5.1 6.4 4.4 2.4
Jan-19
Apr-19
Jul-19
Oct-19
Jan-20
Source: Various national sources, CEIC, MOFSL
Contribution of different components to EAI-GDP growth
Investments, on the other
hand, grew 0.4% YoY in
Jan’20, marking its first
growth since June 2019.
We believe that real GDP
growth would be ~4.5% in
4QFY20 – similar to 4.7% in
3QFY20, implying ~5%
growth in FY20 (v/s 6.1% in
FY19).
Consumption growth lowest in 10 months…:
According to our estimates,
consumption spending increased only 2.8% YoY in Jan’20, as against average
growth of 6.2% in 3QFY20
(Exhibit 5).
While private consumption growth was
broadly unchanged at ~3.5%, the decline of ~10% YoY in fiscal spending –
versus
average growth of ~26% in 2HCY19 – pulled total consumption growth
in Jan’20.
Further, although passenger traffic declined faster, petrol sales
showed some improvement and IIP for consumer durable goods is expected to
contract slowly in Jan’20
(please see Exhibit 11 for the heat map).
…while investments grew for first time in eight months:
Investments, on the
other hand, increased 0.4% YoY in Jan’20
(Exhibit 6),
marking its first growth
since Jun’19 due to first growth in electricity production in six months and lower
(expected) decline in IIP for capital goods
(please see Exhibit 12 for the heat
map).
Further, real imports declined at a slower pace than real exports, due to
which net exports subtracted from EAI-GDP growth, after adding to growth for
seven consecutive months.
EAI-GVA weakens due to services sector:
Details of EAI-GVA suggest that the
moderation in the headline index was led by a decline in fiscal spending, which
pulled down growth in the services sector from 7.6% YoY in Dec’19 to 5.4% in
Jan’20. Farm activities continued growing strongly at ~6% YoY, while the
industrial sector grew at 4% YoY in Jan’20 v/s 2% growth in the previous month
(Exhibit 7-8).
Acceleration in the industrial sector was broad-based as all four
components posted faster growth in Jan’20 (vis-à-vis Dec’19). Mining, power
and construction sectors are likely to have grown at a six-month highest pace in
Jan’20, while manufacturing growth improved from 1.6% in Dec’19 to 4.4% in
Jan’20
(see Exhibit 13 for the heat map).
Expect GDP growth to ~4.5% in 4QFY20:
Overall, although Jan’20 PMI indices
posted 7-8 year high readings, actual data suggest that economic activity growth
weakened and was at a three-month low in Jan’20. While there is no one-to-one
correlation between our EAIs and the official GDP/GVA due to the
underlying
differences,
our composite indices move in
sync
with the official GDP (ex-
discrepancies) and GVA estimates
(Exhibit 9-10).
Consequently, we believe that
real GDP growth would be ~4.5% in 4QFY20 – similar to 4.7% in 3QFY20,
implying ~5% growth in FY20 (v/s 6.1% in FY19). Finally, since fiscal spending is
expected to remain weak in Feb-Mar’20 as the government attempts to meet
the FY20RE deficit target, a recovery in 4QFY20 appears difficult.
3 March 2020
2
 Motilal Oswal Financial Services
Exhibit 5: Consumption growth at 10-month low in Jan’20…
% YoY
7.5
8.4
5.0
3.8 3.6
3mma
MOLI: Consumption
Exhibit 6: …but investments posted first growth in 8 months
5
0
(5)
2.2
1.1
% YoY
1.3
0.3 0.3 0.8
3mma
-0.6
-1.2
(2.9) (1.6)
MOLI: Investments
0.4
(10.7)
(4.3) (5.0)
6.5 6.7 6.3 6.2
5.8 5.4 5.9
4.9
(1.3)
0.0 -0.2
0.5
10.6 6.6
(2.3)
Jan-19
7.2 5.7 4.4 6.1 7.3 6.2 6.8 6.0 6.0 2.8
(10)
(15)
Jan-19 Mar-19 May-19
Jul-19
-5.4
(12.1)
-8.0
(11.6)
-2.9
-11.5
-7.1
-9.1
Mar-19
May-19
Jul-19
Sep-19
Nov-19
Jan-20
Sep-19 Nov-19 Jan-20
Exhibit 7: Services sector grew at three-month slowest pace
in Jan’20…
% YoY
7.4
8.0 7.7
7.4
3MMA
Services
6.1 6.4
Exhibit 8: …while industrial activities posted higher growth
led by broad-based improvement
% YoY
5.5 5.2 5.0 5.1
5.4
3MMA
Industry#
6.3 6.3 6.4 6.4 6.2
5.3 5.2
4.6
4.2
4.2
2.9
5.8
4.0
1.6
4.8 5.0 5.9 4.1 5.4 3.1 7.8 1.8
-0.7 0.6
2.0 4.0
(0.9) (3.0)
8.0 9.5 5.4 7.2 6.4 5.5 7.4 6.3 5.0 4.5 6.2 7.6 5.4
Jan-19
Apr-19
Jul-19
Oct-19
Jan-20
Jan-19
Apr-19
Jul-19
Oct-19
Jan-20
# including construction
Exhibit 9: Our composite EAI-GDP shares a very strong
correlation with official real GDP* growth (% YoY)
12
10
8
6
4
2
Q3FY14 Q3FY15 Q3FY16 Q3FY17 Q3FY18 Q3FY19 Q3FY20
*Excluding discrepancies
5.3
4.7
Composite EAI
(%, YoY)
Official real GDP*
Exhibit 10: Our composite EAI-GVA shares a very strong
correlation with official real GVA growth (% YoY)
10
9
8
7
6
5
4
3
3QFY14 3QFY15 3QFY16 3QFY17 3QFY18 3QFY19 3QFY20
Source: CEIC, Various official sources, MOSL
4.8
4.5
(% YoY)
Official
Estimated
Real GVA
3 March 2020
3
 Motilal Oswal Financial Services
Exhibit 11: Key leading indicators for consumption
Passenger Revenue
% YoY
1
2
Petrol sales
traffic
spending
Jan-19
Feb-19
Mar-19
Apr-19
May-
19
Jun-19
Jul-19
Aug-19
Sep-19
Oct-19
Nov-19
Dec-19
Jan-20
1
Rural
3
wages
2.1
1.0
0.1
(0.7)
(1.1)
(1.3)
(1.3)
(1.7)
(2.5)
(3.6)
(4.6)
(4.3)
(4.2)
6
6
Consumer
4
5
Currency Auto sales Imports
durable: IIP
2.5
0.9
(3.2)
2.2
0.2
(10.2)
(2.4)
(9.7)
(10.5)
(18.8)
(1.6)
(6.7)
(2.1)
6
3.3
(0.6)
0.5
0.5
(2.8)
0.6
(0.5)
(3.8)
(1.7)
(2.2)
0.4
(1.2)
(1.6)
6
49.7
17.6
(88.2)
27.0
6.6
(9.8)
14.3
34.4
26.2
32.0
16.5
31.8
(9.7)
13.3
8.0
7.2
7.7
11.4
10.9
8.9
9.0
6.3
8.9
9.3
3.2
3.5
19.1
18.4
16.8
14.5
14.2
12.7
13.0
12.9
13.6
15.1
12.8
11.9
11.9
2
(4.7)
(3.8)
(15.2)
(16.5)
(8.7)
(12.4)
(18.8)
(23.4)
(22.3)
(12.6)
(12.4)
(14.2)
(14.6)
2.0
(4.6)
(1.0)
0.7
(1.1)
(3.1)
0.5
(2.4)
(4.9)
(5.4)
(4.2)
(5.2)
(3.6)
Foreign
tourists
arrival
5.6
3.7
(4.8)
3.5
0.7
5.4
1.4
1.6
4.3
6.1
7.8
2.8
1.3
Personal
credit
16.9
16.7
16.4
15.7
16.9
16.6
17.0
15.6
16.6
17.2
16.4
15.9
16.9
Services
PMI
52.2
52.5
52.0
51.0
50.2
49.6
53.8
52.4
48.7
49.2
52.7
53.3
55.5
Railways and aviation
Revenue spending
less
interest payments of central government
3
4
Real rural wages, deflated by CPI for rural workers
Includes passenger vehicles and two-wheelers
5
Import of agricultural items, leather products, newsprint and electronic goods, textiles (excluding gold, silver, precious metals)
6
Our forecasts
Exhibit 12: Key leading indicators for investment
% YoY
Jan-19
Feb-19
Mar-19
Apr-19
May-19
Jun-19
Jul-19
Aug-19
Sep-19
Oct-19
Nov-19
Dec-19
Jan-20
1
Cargo
1
traffic
0.8
2.4
5.6
4.1
1.7
1.1
2.3
(3.4)
(4.4)
(7.1)
0.4
4.9
2.8
Capital
IIP: Non-
Cement
IIP: Capital Industrial
4
Manufact-
Electricity Auto sales Diesel sales goods’
metallic
Govt capex
goods
credit
uring PMI
3
Production
imports
products
0.8
(4.5)
6.3
3.3
11.0
4.6
(3.6)
5.2
(35.0)
53.9
2
1.2
2.1
5.9
7.4
8.6
5.2
(0.9)
(2.6)
(12.2)
(4.9)
(0.1)
2.8
(2.0)
(3.2)
(6.6)
(8.2)
(10.8)
(17.8)
(25.1)
(24.3)
(14.6)
(6.8)
0.2
(3.8)
3.1
1.4
2.1
2.9
1.5
3.5
(1.2)
(3.2)
(7.4)
9.0
(0.3)
(1.9)
(4.5)
0.9
(5.5)
1.5
(14.0)
(4.4)
(20.1)
(9.4)
(6.1)
(21.8)
(16.5)
6.6
8.0
15.7
2.3
2.8
(1.9)
7.7
(5.1)
(2.0)
(7.7)
4.3
5.5
5.0
2.6
8.2
0.2
(0.1)
(3.8)
6.9
(4.7)
(2.3)
(9.5)
1.2
1.7
2.3
5
2
(9.3)
(9.1)
(1.4)
(2.1)
(6.9)
(7.0)
(20.9)
(20.5)
(22.0)
(8.2)
(18.2)
(4.8)
5
5.6
6.9
6.9
6.4
6.4
6.1
3.9
2.7
3.4
2.4
1.6
2.5
33.1
(185.0)
(34.5)
0.2
(34.1)
83.2
36.8
68.9
(5.1)
(12.3)
104.4
(31.8)
54.3
52.6
51.8
52.7
52.1
52.5
51.4
51.4
50.6
51.2
52.7
55.3
Railways and waterways
3
Machinery and equipment, transport equipment, machine tools and project goods
5
Our forecasts
Worse than previous month and a year ago
Worse than the previous month but better than a year ago
Better than the previous month but worse than a year ago
Better than previous month and a year ago
Includes commercial vehicles and three-wheelers
4
Capital spending of the central government
3 March 2020
4
 Motilal Oswal Financial Services
Exhibit 13: Key indicators used in creation of EAI-GVA on monthly basis
% YoY
IIP: Fertiliser
Domestic tractor sales
Real rural wages
Reservoir levels
Agriculture sector
Industrial sector
Coal
Crude oil
Natural gas
IIP: Mining
Mining
Electricity
IIP: Manufacturing
Credit growth
2
1
Jan-19 Feb-19 Mar-19 Apr-19 May-19 Jun-19 Jul-19 Aug-19 Sep-19 Oct-19 Nov-19 Dec-19 Jan-20
10.5
2.8
2.1
(1.2)
3.2
2.0
(4.3)
6.2
3.8
6.2
0.8
1.3
2.3
2.0
5.3
5.5
11.0
4.6
6.4
4.5
4.8
(4.7)
4
Agriculture and allied activities
2.5
(0.6)
1.0
7.9
2.8
7.4
(6.1)
3.8
2.2
4.4
1.2
(0.3)
2.6
5.7
5.9
4.9
8.0
2.6
1.9
4.0
5.0
(3.6)
9.3
3.7
2.4
(0.5)
1.4
18.3
6.8
2.2
9.8
9.5
7.5
8.0
4.3
(15.0)
0.1
9.1
1.4
9.1
(6.2)
1.4
0.8
3.5
2.1
3.1
3.7
2.6
7.0
11.5
15.7
8.2
5.1
5.3
5.9
(14.2)
9.7
(4.8)
5.6
0.5
8.1
(38.2)
6.7
(1.9)
3.4
5.4
5.3
5.7
(4.4)
(14.7)
(0.7)
14.6
1.2
3.2
(6.7)
(0.8)
5.1
3.5
5.9
2.5
3.6
(2.1)
4.3
13.3
2.3
0.2
(0.7)
3.4
4.1
(15.9)
6.7
3.5
4.1
0.4
3.2
9.6
6.2
3.1
(0.8)
7.2
5.9
6.3
(1.0)
(17.1)
(1.1)
14.4
1.1
1.7
(6.9)
(0.1)
2.3
2.0
7.4
4.4
3.5
(0.3)
6.5
13.3
2.8
(0.1)
3.0
3.2
5.4
(8.6)
4.4
0.7
1.6
(2.8)
11.7
3.1
8.1
2.6
1.2
6.4
5.8
6.2
1.5
(1.3)
0.1
2.9
(6.8)
(2.1)
1.5
1.5
8.6
0.3
4.3
(1.6)
3.1
10.8
(1.9)
(3.8)
(1.3)
2.2
3.1
1.5
(1.3)
(1.0)
(1.6)
(4.4)
(0.5)
4.9
4.5
5.2
4.8
4.9
4.4
9.2
8.1
7.7
6.9
2.9
6.0
7.8
2.9
(1.7)
13.0
1.2
(8.6)
(5.4)
(3.9)
0.0
(0.5)
(0.9)
(1.7)
2.7
0.4
2.4
3.8
(5.1)
(4.7)
(5.7)
2.4
1.8
5.4
(6.4)
(2.5)
19.3
2.8
(20.5)
(5.4)
(4.9)
(8.6)
(6.4)
(2.6)
(4.3)
2.4
(3.7)
(1.4)
(1.4)
(2.0)
(2.3)
(7.0)
3.2
(0.9)
(22.4)
5.2
4.3
(4.4)
(1.7)
10.8
32.4
9.0
0.3
(4.3)
5.0
3.4
3.4
11.8
(5.5)
(3.6)
36.0
4.0
(17.6)
(5.1)
(5.6)
(8.0)
(5.6)
(12.2)
(2.3)
3.4
(9.5)
(2.7)
(0.5)
(7.7)
(9.5)
(9.7)
0.6
(3.0)
(12.8)
5.2
6.1
(7.1)
(2.1)
18.4
27.4
10.2
1.1
(5.7)
4.5
2.5
2.2
13.6
(12.8)
(4.6)
49.4
3.9
(2.5)
(6.0)
(6.4)
1.8
0.3
(4.9)
2.7
1.8
7.1
8.7
(0.1)
4.3
1.2
(2.4)
4.0
5.8
(12.1)
4.0
7.8
0.4
0.5
11.9
11.7
8.9
(1.5)
(1.9)
6.2
6.0
6.3
10.2
4.0
(4.3)
6.1
6.1
(7.4)
(9.2)
5.4
1.6
(0.1)
(1.2)
(0.9)
(1.2)
1.6
4.3
5.5
1.7
(2.6)
3.9
2.0
(13.1)
3.1
2.8
4.9
(1.1)
13.2
38.4
6.9
(2.1)
0.2
7.6
5.9
5.9
8
(0.1)
3.3
(4.2)
5.8
8.0
(5.3)
(9.1)
2.4
8
8
(14.9) (12.0) (17.2)
(11.7) (38.5)
58.7
65.6
2.2
2.8
1.5
8
(0.6)
0.6
4.4
2.2
5.0
2.3
8
8
Fuel consumption
Manufacturing
Steel production
Cement output
IIP: NMMP
3
IIP: Construction
Construction
Industry
Services sector
Auto sales
Trade credit
Foreign tourist arrivals
Freight traffic
MFs AUMs
Fiscal Spending
Real deposits
7
6
5
5
(0.1)
4.4
4.0
(12.3) (18.7) (23.5)
6.7
5.4
1.1
0.7
4.0
(14.9)
8.2
1.5
(5.7)
5.5
4.4
4.8
9.7
1.4
2.3
(0.5)
5.2
24.3
8.3
0.8
(0.7)
7.4
7.1
7.8
4.9
1.6
(3.4)
(3.6)
(0.1)
33.2
8.5
0.2
1.7
6.3
4.9
5.2
2
(13.8)
1.6
1.3
2.8
(1.6)
15.6
(15.4)
7.7
(2.4)
6.3
5.4
5.1
5.0
8
7.6
5.6
0.8
3.4
1.5
23.1
6.7
2.4
1.0
8.0
6.7
7.0
Passengers traffic
Telecom subscribers
PMI: Services
Services sector
Aggregates
Real GVA
Non-farm GVA
1
Rural wages; deflated by CPI for rural workers
3
Non-metallic minerals products (NMMP)
5
Railways and aviation
7
Bank deposits; deflated by WPI
Banks’ industrial credit growth; deflated by WPI
4
Bank’s non-food trade credit; deflated by WPI
6
Total non-interest spending by the central government; deflated by WPI
8
Our forecasts
Source: Various National Sources, CEIC, MoSL
Worse than previous month and a year ago
Worse than the previous month but better than a year ago
Better than the previous month but worse than a year ago
Better than previous month and a year ago
3 March 2020
5
 Motilal Oswal Financial Services
NOTES
3 March 2020
6
 Motilal Oswal Financial Services
Explanation of Investment Rating
Investment Rating
BUY
SELL
NEUTRAL
UNDER REVIEW
NOT RATED
*In
case the recommendation given by the Research Analyst is inconsistent with the investment rating legend for a continuous period of 30 days, the Research Analyst shall within following 30
days take appropriate measures to make the recommendation consistent with the investment rating legend.
Disclosures:
The following Disclosures are being made in compliance with the SEBI Research Analyst Regulations 2014 (herein after referred to as the Regulations).
Motilal Oswal Financial Services Ltd. (MOFSL) is a SEBI Registered Research Analyst having registration no. INH000000412. MOFSL, the Research Entity (RE) as defined in the Regulations,
is engaged in the business of providing Stock broking services, Investment Advisory Services, Depository participant services & distribution of various financial products. MOFSL is a subsidiary
company of Passionate Investment Management Pvt. Ltd.. (PIMPL). MOFSL is a listed public company, the details in respect of which are available on
www.motilaloswal.com.
MOFSL
(erstwhile Motilal Oswal Securities Limited - MOFSL) is registered with the Securities & Exchange Board of India (SEBI) and is a registered Trading Member with National Stock Exchange of
India Ltd. (NSE) and Bombay Stock Exchange Limited (BSE), Multi Commodity Exchange of India Limited (MCX) and National Commodity & Derivatives Exchange Limited (NCDEX) for its
stock broking activities & is Depository participant with Central Depository Services Limited (CDSL) National Securities Depository Limited (NSDL),NERL, COMRIS and CCRL and is member
of Association of Mutual Funds of India (AMFI) for distribution of financial products and Insurance Regulatory & Development Authority of India (IRDA) as Corporate Agent for insurance
products. Details of associate entities of Motilal Oswal Financial Services Limited are available on the website at
http://onlinereports.motilaloswal.com/Dormant/documents/Associate%20Details.pdf
Details of pending Enquiry Proceedings of Motilal Oswal Financial Services Limited are available on the website at
https://galaxy.motilaloswal.com/ResearchAnalyst/PublishViewLitigation.aspx
MOFSL, it’s associates, Research Analyst or their relative may have any financial interest in the subject company. MOFSL and/or its associates and/or Research Analyst may have
actual/beneficial ownership of 1% or more securities in the subject company in the past 12 months.
MOFSL and its associate company(ies), their directors and Research Analyst and their
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an advisor or lender/borrower to such company(ies) or may have any other potential conflict of interests with respect to any recommendation and other related information and opinions.;
however the same shall have no bearing whatsoever on the specific recommendations made by the analyst(s), as the recommendations made by the analyst(s) are completely independent of
the views of the associates of MOFSL even though there might exist an inherent conflict of interest in some of the stocks mentioned in the research report.
Research Analyst may have served
as director/officer, etc. in the subject company in the past 12 months. MOFSL and/or its associates may have received any compensation from the subject company in the past 12 months.
In the past 12 months , MOFSL or any of its associates may have:
1.
managed or co-managed public offering of securities from subject company of this research report,
2.
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3.
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4.
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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,
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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.
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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
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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.
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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.
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
3 March 2020
7
 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
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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
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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
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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.
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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)
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Singapore Person must immediately discontinue any use of this Report and inform MOCMSPL.
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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
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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
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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.
3 March 2020
8