India Strategy

Gautam Duggad Jayant Parasramka The Eagle Eye

Gautam.Duggad@motilaloswal.com Jayant.Parasramka@motilaloswal.com
October 2021
June 2020
INDIA OUTPERFORMS EM IN ECONOMY
SEP’21  India posts CAS of 0.9% of GDP in 1QFY22
 Fiscal deficit at 31.1% of BE in first 5 months of
 India outperforms EM Index in Sep’21; leads
CY21 gainers among major global indices FY22
 Old economy PSU stocks & Real Estate
outperform

MARKETS
 Sensex closes above 60k in Sep’21; takes 28 HIGH FREQ. INDICATORS, COVID
trading days to move from 55k to 60k
 GST collections up 4% MoM to 1.17t
 Nifty makes new all-time high on 48 trading days
 UPI average daily transactions double to
in CY21
 NSE 500 Universe - 145 companies see 3yr CAGR
of 30%+; 76 companies decline
CONTENTS INR218b in Sep’21 v/s INR110b in Sep’20
 Vaccination pace picks up in Sep’21; 900m
doses administered cumulatively

REAL ESTATE VALUATIONS, FLOWS

 Improved affordability and consolidation to drive  Mcap-to-GDP ratio at 115%; highest since 2007
housing demand  Nifty trading at premium to LPA on P/E and P/B
 Prices stagnant across key markets for last 7 basis
years  IT and Consumer valuations at 15-year highs
 FIIs/DIIs see net inflows in Sep’21

CHART BOOK | October 2021 2 June 2020

 India outperforms EM in Sep’21 and CY21YTD
World equity indices (MoM) in USD terms (%)
3
1 1

-2
-4 -4 -4 -4 -5 -5 -5
-6

-11

S&P 500

MSCI EM
UK

South Korea
Russia MICEX

France

China (HSCEI)

Germany

Brazil
India - Nifty

Nasdaq
Japan

Taiwan
World equity indices (CY21 YTD) in USD terms (%)
24
16 15 14 12 11
8
5

-1 -2 -3
-12
-19

South Korea
S&P 500

MSCI EM
France

UK
India - Nifty

Russia MICEX

Germany

Brazil
Nasdaq

China (HSCEI)
Taiwan

Japan

As of 30 Sep’21

CHART BOOK | October 2021 3 June 2020

 3
Nifty-50

26
Nifty-50

7
Midcap 100

46
Midcap 100

6
Smallcap 100

54
Smallcap 100

CHART BOOK | October 2021

Sectoral performance MoM (%)

34

Media

72
Metal

Sectoral performance in CY21YTD (%)

33

Real Estate

64
Real Estate
13

Oil & Gas

46
Nifty PSE
12

Nifty PSE

44
Technology
7

Infra

4
42
Bank PSU
6

Bank PSU
38

Infra
6

Auto
35

Oil & Gas

Media and Real Estate outperform in Sep’21

Bank PVT
30

Media
2

Consumer
18

Consumer
1

Technology
15

Auto
1

Healthcare
13

Bank PVT
-2

Metal
Healthcare
12

June 2020
 Old economy stocks lead gainers in Sep’21;
 32/50 Nifty companies posted gains in Sep’21. Old economy stocks viz. Coal India, NTPC, ONGC, and IOCL outperformed.
 In CY21YTD, only 3 of 50 Nifty components have declined. Metals continues to lead, while Autos remains a laggard.

Best and worst Nifty performers (MoM) in Sep’21(%) – Coal India, NTPC, and ONGC lead Nifty gainers
27
22 20
16 14 13 13 12 12 12
3

-3 -3 -3 -5 -5 -6 -6 -7 -8 -11
ONGC

Tata Motors

NIfty

UltraTech Cem.
Axis Bank

JSW Steel
Coal India

UPL

Tech Mahindra

Tata Steel
NTPC

IOCL

ITC

ICICI Bank
Kotak Mah. Bank

Titan Company

IndusInd Bank

Reliance Inds.

Tata Consumer

BPCL
Divi's Lab.
Best and worst Nifty performers (YoY) in CY21 YTD (%) – global cyclical leads; Auto underperforms
103 100 100
81 80 73 65 64 55 53
26
11 10 10 8 7 6 0

-4 -6 -9
Bajaj Finserv

Tata Motors

JSW Steel

Eicher Motors

Maruti Suzuki
Tata Steel

Wipro

ONGC

NIfty

HDFC Bank

HDFC Life Insur.

Hero Motocorp
Adani Ports

Dr Reddy's Labs
Grasim Inds

St Bk of India

HDFC

Nestle India

Kotak Mah. Bank

Hindalco Inds.

Britannia Inds.

CHART BOOK | October 2021 5 June 2020

 95
JSW Energy Vodafone Idea

475
77
Adani Gas Zee Entertainmen

55
Adani Transmissi Godrej Propert.

279 256
47
Adani Enterp. JSW Energy

206
43
IRCTC Bharti Infratel

Mindtree Oil India 43

*List excludes Nifty companies

CHART BOOK | October 2021

39
Tata Motors-DVR Tata Motors-DVR
38

Oil India IRCTC

37

Polycab India Oberoi Realty

164 153 152 142 130

32

IOB GMR Infra.

30

Tata Power Co. DLF

Top gainers from BSE-200 pack in CY21YTD (%)*

Top gainers from BSE-200 pack on MoM basis (%)*

29

SRF Indian Hotels Co

23

Mphasis BHEL
23

L&T Technology Tata Power Co.

113 110 102 102 101 95

22

Dalmia BharatLtd Voltas

6
95
20

Adani Power IDBI Bank

Apollo Hospitals L&T Technology

Two-thirds of BSE-200 constituents post gains

Piramal Enterp. Aditya Bir. Fas.

86 82 80
20 18 16

BHEL IOB
79
16

DLF Mindtree
78
16

Vedanta M & M Fin. Serv.

76
16

Container Corpn. Polycab India

 In CY21YTD, 53 companies have gained more than 50%, while 16 companies have grown 2x.

73
15

Cummins India Honeywell Auto

69
15

Gujarat Gas RBL Bank

69
13

Bharat Electron HPCL

65
12

Oberoi Realty Bosch

62
11

Astral Poly Tech SRF

11

61

Godrej Propert. IDFC First Bank

61
11

Ambuja Cements NHPC Ltd

 Two-thirds of BSE-200 constituents gained in Sep’21. Vodafone Idea / Zee / Godrej Properties gained 95%/77%/55% MoM.

60
11

HAL Exide Inds.

3

29

BSE 200 BSE 200

June 2020
 3

29
BSE 200 BSE 200

YTD.

7
-4
Berger Paints Bharat Forge
>10%.

6
-4
Indraprastha Gas Emami

6
-4
M & M Fin. Serv. Shriram Trans.

5
-4
Sun TV Network Muthoot Finance

*List excludes Nifty companies

-4
MRF Relaxo Footwear

CHART BOOK | October 2021

5
-4
ICICI Lombard Dalmia BharatLtd

4
-4
L&T Fin.Holdings Bayer Crop Sci.

4
-4

General Insuranc Gland Pharma

4
-5

Kansai Nerolac Endurance Tech.

3
-5

Glenmark Pharma. Ambuja Cements

2
-5

Gillette India Vedanta

0
-5

HDFC AMC HDFC AMC

-6

-1
AIA Engineering Biggest laggards among BSE-200 constituents in CY21YTD (%) Natco Pharma

-2
-6

Coromandel Inter Siemens

Biggest laggards among BSE-200 constituents on MoM basis (%)*

7
-3
-6

Lupin Godrej Consumer

-3
-6

Bayer Crop Sci. -4 P I Industries

-6

Petronet LNG Ipca Labs.

-6
-6

Syngene Intl. Syngene Intl.

One-third of BSE-200 constituents decline

-6
-7

Sanofi India SAIL

-7
-7

Exide Inds. ACC

-7
-7

Natco Pharma Max Financial

-9
-7

Glaxosmi. Pharma NMDC

-8

City Union Bank Adani Enterp.

-9

Whirlpool India Dr Lal Pathlabs

-12 -13

RBL Bank SBI Card

Amara Raja Batt. Apollo Hospitals

Aurobindo Pharma Guj.St.Petronet

-10 -10 -10

Biocon Gujarat Gas

Alembic Pharma Sanofi India

-17 -19 -21 -22 -24
-12 -13
 In CY21YTD, 22 companies have posted declines – Bandhan Bank, Alembic Pharma, Biocon, and Aurobindo have declined >20%

Bandhan Bank Bank of India

 One-third of BSE-200 companies posted declines in Sep’21. BoI, Sanofi, Gujarat Gas, GSPL, Apollo Hospital, and SBI Cards declined

-30
-16

June 2020
 Jan-18 426
Jan-18 4,442 Feb-18 380
Feb-18 3,770 Mar-18 354
Mar-18 3,946 Apr-18 340
Apr-18 3,342 May-18 352
May-18 4,117 Jun-18 312
Jun-18 3,787
Jul-18 331
level since Nov’20.

Jul-18 3,635
Aug-18 368
Aug-18 3,526
Sep-18 417
Sep-18 3,983

CHART BOOK | October 2021

Oct-18 387
Oct-18 4,287
Nov-18 335
Nov-18 3,449
Dec-18 325
Dec-18 3,064
Jan-19 316
Monthly Avg. Cash Volume (INR b)

Jan-19 3,577
Feb-19 345

Monthly Institution Volume (INR b)

Feb-19 3,594
Mar-19 410
Mar-19 4,043
Apr-19 366
Apr-19 3,549
May-19 385
May-19 4,401
Jun-19 344
Jun-19 3,140
Jul-19 349
Jul-19 3,788
Aug-19 363
Aug-19 3,932
Sep-19 403
Sep-19 3,822
Oct-19 3,856 Oct-19 403
Nov-19 4,570 Nov-19 446

8
Dec-19 3,392 Dec-19 346
Jan-20 4,243 Jan-20 374
Feb-20 4,325 Feb-20 426
Mar-20 6,581 Mar-20 518
Non Institution % to Cash Volume (RHS)

Apr-20 3,873 Apr-20 528

Institutional cash volumes as % of Mcap

May-20 4,472 May-20 561

Jun-20 4,802 Jun-20 664
Jul-20 4,194 Jul-20 621
Aug-20 4,454 Aug-20 655
Sep-20 4,539 Sep-20 588
Oct-20 4,150 Oct-20 551
Nov-20 6,523 Nov-20 704
Dec-20 5,250 Dec-20 670
 Monthly Institutional cash trading volumes were up 17% MoM to INR7.2t, the highest ever in a month.

Jan-21 5,632 Jan-21 777

Feb-21 6,042 Feb-21 886
Mar-21 6,269 Mar-21 717
Apr-21 4,835 Apr-21 744
May-21 5,587 May-21 840
Jun-21 5,623 Jun-21 775
Jul-21 5,022 Jul-21 682
Average daily cash volumes up 9% MoM; Institutional volumes cross INR7t

Aug-21 6,194 Aug-21 681

54

Sep-21 7,264 Sep-21 747

 Average daily cash volumes were up 9% MoM to INR747b in Sep’21. Non-Institutional participation was down to 54%, the lowest

30
42
54
66
78

0.0
1.8
2.9 3.5
5.3
7.0

June 2020
 Sensex scales 60k peak; takes 28 days to move 5k points
 Sensex closed above 60k on 24th Sep 2021. The movement from 50k to 60k took 158 days, while it took just 28 days to move from
55k to 60k.
 Sensex has gained 24% YTD after rallying 16% in 2020.

Number of trading days to achieve this milestone 28

130
41
375
337
711 183
1,607
109
353
60,048
2,062 1,588 8,496 days to achieve 60k 50,255
972 milestone

549 Jan'86 1,000 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000 50,000 55,000 60,000
July'90 Oct'99 Feb'06 July'07 Dec'07 June'14 Apr'17 Jan'18 June'19 Dec'20 Feb'21 Aug'21 Sep'21

Yearly Returns (%)

82 81 73
64
51 47 47 42
37 35 30 28 28
26 24 19 17 17 17 16
14 13 9 6 4 2

-1 -5 -5
-16 -16 -18 -21 -21 -25
-52
1991
2009
2003
1999
1988
2007
2006
2005
1992
1990
2014
1993
2017
2012
2021
1997
2010
1994
1989
2020
2019
2004
2013
2018
2002
2016
1996
1986
2015
1987
1998
2001
2000
1995
2011
2008
Source: Bloomberg, MOFSL. As of 30 Sep’21

CHART BOOK | October 2021 9 June 2020

 Nifty achieves new ATH on 48 trading days in CY21
 The markets have achieved a new all-time high on 48 trading days, out of 185 days, in YTD’CY21.
 Markets achieved a new all-time high on 55 trading days, the highest in a year so far, in 2014.

No. of All-Time high Days in a calendar year

55 54

49 48
45
41

29

24

15
13
9
7 6
4
1 1 - - - - - -
2014

2006

2007

2021

2005

2017

2018

2020

2004

2019

2015

2003

2000

2008

2010

2013

2001

2002

2009

2011

2012

2016
Source: Bloomberg, MOFSL. As of 30 Sep’21

CHART BOOK | October 2021 10 June 2020

 145 companies see 3yr CAGR of >30%; 76 companies decline
 145 companies in the NSE-500 index have seen a three-year CAGR of >30%, while 76 companies have declined over this period.
 The last instance of the no. of companies with three-year CAGR returns of >30% exceeding the number of companies - which
declined during the said period - was in March’19. This underscores the breadth of the current bull market.

400 3 Year Rolling CAGR (%) <0 0-10 10-20 20-30 >30

300

200

100

0
Jan'14
Jan'13

Jan'15
May'13

Sep'13

May'14

Sep'14

May'15

Sep'15

Jan'16

Jan'17

Sep'17

Jan'18

Jan'19

Jan'20

Jan'21
May'16

Sep'16

May'17

May'18

Sep'18

May'19

Sep'19

May'20

Sep'20

May'21

Sep'21
% Distribution of NSE 500 3 year Rolling CAGR Performance (%) <0 0-10 10-20 20-30 >30

100

75

50

25
0
May'13

May'14

May'15

May'16

May'17

May'18

May'19

May'20

May'21
Jan'13

Sep'13

Jan'14

Sep'14

Jan'15

Sep'15

Jan'16

Sep'16

Jan'17

Sep'17

Jan'18

Sep'18

Jan'19

Sep'19

Jan'20

Sep'20

Jan'21

Sep'21
Source: Bloomberg, MOFSL. As of 30 Sep’21. Based on current constituents

CHART BOOK | October 2021 11 June 2020

 Nifty valuations: Broad-based valuation re-rating
 The broad-based rally in the markets from lows of Mar’20 led to a valuation re-rating for the Nifty-50.
 As of Dec’19 (pre-pandemic), 17 Nifty companies were trading at a valuation of above 25x (9 above 35x).
 In Mar’20, only 11 companies traded at P/E >25x (8 above 35x). In Sep’21, 25 companies were trading at P/E >25x (13 above 35x).

Distribution of Nifty 50 companies based on 12M fwd P/E <15 15-25 25-35 >35
32

24

16

Jun'20
Mar'18

Jun'18

Sep'18

Mar'19

Jun'19

Sep'19

Mar'20

Sep'20

Mar'21

Jun'21

Sep'21
Dec'17

Dec'18

Dec'19

Dec'20
% Distribution of Nifty 50 companies based on 12M fwd P/E <15 15-25 25-35 >35

100%

75%

50%

25%

0%
Mar'19
Mar'18

Jun'18

Sep'18

Jun'19

Sep'19

Mar'20

Jun'20

Sep'20

Mar'21

Jun'21

Sep'21
Dec'17

Dec'18

Dec'19

Dec'20
Source: Bloomberg, MOFSL. As of 30 Sep’21. Based on current constituents

CHART BOOK | October 2021 12 June 2020

 Real Estate: Improved affordability and consolidation to drive housing demand
 In the last seven years, property prices have remained stagnant across key markets, while income growth has been 7-10%.
 Reforms such as demonetization, GST, and RERA have driven consolidation as market share for the Top 10 listed developers has
doubled since 2017. COVID-19 should further accelerate this shift, in our view.

Price stagnation in key markets quite evident Decade-low interest rates further enhance affordability

Bangalore (2% CAGR) Mumbai (-1% CAGR)

Home loan rate Effective interest rate Rental yield
NCR (-1% CAGR) Pune (-2% CAGR)
12%
Top-8 cities (0% CAGR)
140
10%
130
120 7%
110
5%
100
1HCY14

2HCY14

1HCY15

2HCY15

1HCY16

2HCY16

1HCY17

2HCY17

1HCY18

2HCY18

1HCY19

2HCY19

1HCY20

2HCY20

1HCY21
2%
2013 2014 2015 2016 2017 2018 2019 2020 Current

Top 10 listed developers see sharp increase in market share MMR sees highest increase in unit registration in a decade

Area share Launch share 32% Units registered in September in MMR

29% 7,864
24%
5,714 5,913 5,597
20%
17% 17% 18% 4,781 4,807 4,429
14% 4,116 4,032
13%
11%
9% 9% 9% 9%
1,066

FY15 FY16 FY17 FY18 FY19 FY20 FY21 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

Source: Knight Frank, HDFC, Company, MOSL Research

CHART BOOK | October 2021 13 June 2020

 India posts Current Account Surplus in 1QFY22; fiscal deficit at 31.1% of BE
 India reported CAS of USD6.5b (0.9% of GDP) in 1QFY22 v/s deficit of USD8.1b (or 1% of GDP) in 4QFY21.
 India’s fiscal deficit for the first five months stood at 31.1% of FY22BE, the lowest in a decade.

India sees higher-than-expected CAS of USD6.5b (or 0.9% of …on sharp deterioration in merchandise trade deficit during the
GDP) in 1QFY22… quarter
(% of GDP) CAB CAB ex fuel products Goods Services Income
12 8 (% of GDP)

4 1.6
8
3.7
4 3.3 0
-4.4
0.9
(4)
0
(8)
(4)
1QFY19 3QFY19 1QFY20 3QFY20 1QFY21 3QFY21 1QFY22
1QFY16 1QFY17 1QFY18 1QFY19 1QFY20 1QFY21 1QFY22

Government gross receipts at ~41% of FY22BE, similar to Fiscal deficit in first five months at just 31.1% of FY22BE
previous peak of FY11
Gross receipts (% of BEs) (% of BE/RE) Fiscal Deficit
52 109.3
40.7 40.9
96.1 94.7
39
74.6 74.9 76.4 78.7
26 65.7 66.5

13 31.1
0
Aug-12

Aug-13

Aug-14

Aug-15

Aug-16

Aug-17

Aug-18

Aug-19

Aug-20

Aug-21
Aug-99

Aug-01

Aug-03

Aug-05

Aug-07

Aug-09

Aug-11

Aug-13

Aug-15

Aug-17

Aug-19

Aug-21

CHART BOOK | October 2021 14 June 2020

GST collections up 4% MoM; UPI transactions double YoY
 GST collections were up 4% MoM to INR1.17t. Daily UPI transactions increased to INR218b from INR110b in Sep’20.
 Imports posted a sharp increase of 20% MoM in Sep’21. The Manufacturing PMI increased to 53.7 in Sep’21 (from 52.3 in Aug’21).

GST collections up 4% MoM UPI daily transactions double to INR218b/day

GST collection (INR t) UPI daily - INR b

218
1.15

206
195
182
165
163

158
152
139
134
130
125
110
96
94
87
77

70
70

67
50
1.03
1.11
1.05
0.98
0.32
0.62
0.91
0.87
0.86
0.95
1.05
1.05

1.20
1.13
1.24
1.41
1.03
0.92
1.16
1.12
1.17

Jul-20

Jul-21
Mar-20

May-20

Sep-20

Jan-21

Mar-21

May-21

Sep-21
Jan-20

Nov-20
Oct-20
Dec-19

Dec-20
Feb-20

Apr-20

Jun-20

Aug-20

Feb-21

Apr-21

Jun-21

Aug-21
Imports see sharp increase of 20% MoM in Sep’21 Manufacturing PMI increases to 53.7

Exports Imports (% MoM) Manufacturing PMI increases to 53.7

100
60
50 55.3 53.7
19.9
50
0 40
-50 0.9 30
20
-100
Mar'19
May'19

Mar'20
May'20

Mar'21
May'21
Jul'19

Nov'19

Nov'20
Jan'19

Sep'19

Jan'20

Jul'20
Sep'20

Jan'21

Jul'21
Sep'21
Mar'20

Mar'21
Jun'19

Dec'19
Sep'19

Jun'20

Dec'20
Sep'20

Jun'21

Sep'21

Source: MOFSL, Ministry of Commerce

CHART BOOK | October 2021 15 June 2020

 Mar'20 1
3.1 Apr'20 34
31'Jan'21
0.0
May'20 155
11.1 Jun'20 395
28'Feb'21
2.4
Jul'20 1,110
55.2 Aug'20 1,995
31'Mar'21
8.7
Sep'20 2,621
125.4 Oct'20 1,871
30'Apr'21
26.6

CHART BOOK | October 2021

Nov'20 1,209

Total doses administered (millions)

168.4 Dec'20 894
31'May'21
43.4
Jan'21 459
272.5 Feb'21 351
New cases on a monthly basis (in thousands)

30'Jun'21
58.1 Mar'21 1,124
361.3 Apr'21 6,944
31'Jul'21
101.8 May'21 9,009
503.5 Jun'21 2,237

First Dose Administered

31'Aug'21
149.5

Second dose administered

Jul'21 1,244
650.9 Aug'21 1,156
30'Sep'21
239.3 Sep'21 955

Source: Ministry of Health and Family Welfare, ourworldindata.org. MOFSL

 The pace of vaccinations increased to 7.9m doses/day in Sep’21.

16
 More than 900m vaccines have been administered up to 3rd Oct 2021.

27'Apr'21 2.5 Mar'20 1 Thousands

04'May'21 1.8 Apr'20 25
11'May'21 2.3
May'20 93
18'May'21 1.6
25'May'21 1.6 Jun'20 220
01'Jun'21 2.6 Jul'20 565
08'Jun'21 2.9 Aug'20 786
 Active cases declined 27% MoM in Sep’21 to 0.28m. New cases declined 17% in Sep’21.

15'Jun'21 3.2
Sep'20 941
22'Jun'21 4.6
29'Jun'21 5.4 Oct'20 570
06'Jul'21 4.1 Nov'20 454
13'Jul'21 3.4 Dec'20 254
20'Jul'21 4.3
27'Jul'21 4.4 Jan'21 169
Total Active Cases (th)

03'Aug'21 5.6 Feb'21 165

10'Aug'21 5.3 Mar'21 586
17'Aug'21 6.0
Vaccination 7 day mov. Average

Apr'21 3,669
24'Aug'21 5.0
31'Aug'21 8.4 May'21 1,902
07'Sep'21 7.6 Jun'21 529
14'Sep'21 7.3 Jul'21 418
21'Sep'21 9.9
28'Sep'21 7.1 Aug'21 386
Active COVID-19 cases decline 27% MoM; 900m vaccines administered

30'Sep'21 6.9 Sep'21 282

June 2020
 Nifty composition: IT weight the highest since ‘06; Auto the lowest since ‘08
 After the spectacular run in CY21, IT weight in the Nifty has reached multi-year highs of 17.4%.
 Auto’s weight dropped 70bps (from Dec’20) to 4.7%, the lowest since Dec’08.
 Private Banks continues to be a laggard as its weight in the index is still 190bps below Dec’20 levels

Weight in the Nifty (%)

Sector Dec’04 Dec’08 Dec’12 Dec’19 Dec’20 Sep’21 Technology weight
up 110bp since
Automobiles 6.7 2.5 8.8 5.7 5.4 4.7
Dec’20
Banks - Private 4.7 5.0 16.9 27.8 24.7 22.8
Banks - Public 5.8 5.4 4.7 2.6 1.8 2.3
NBFC + Insurance 2.1 2.3 7.9 11.6 12.3 12.2
Capital Goods 4.0 7.7 5.9 3.2 2.6 2.7 Autos weight drops
Cement 2.8 1.7 4.2 1.5 2.2 2.5 below 5% to 4.7% -
the lowest since
Consumer 7.8 6.5 12.3 10.2 10.4 9.9
Dec’08
Healthcare 6.3 2.6 5.0 2.1 3.6 3.4
Metals 8.2 4.8 3.8 2.4 2.0 3.1
Oil and Gas 27.1 24.5 12.3 12.5 12.5 12.3
Reliance 8.3 10.6 7.4 9.8 10.7 10.7
Telecom 6.3 11.6 2.0 2.2 2.0 2.1
Private Banks’
weight declines by
Technology 14.5 9.0 11.4 12.8 16.3 17.4
500bps since Dec’19
Utilities 1.9 13.3 4.5 2.8 2.1 2.2 to 22.8%
Miscellaneous 2.0 3.3 0.5 2.6 2.1 2.4
Nifty 100 100 100 100 100 100

CHART BOOK | October 2021 17 June 2020

 -10
-5
0
5
10
-6
0
6

-12
12
Jan'19 Jan'19
Feb'19 Feb'19
Mar'19 Mar'19
Apr'19 Apr'19 FII (USD b)

Net DII (USD b)

May'19 May'19
Jun'19 Jun'19

CHART BOOK | October 2021

Jul'19 Jul'19
Aug'19 Aug'19
Sep'19 Sep'19
Oct'19 Oct'19
Nov'19 Nov'19
Dec'19 Dec'19
Jan'20 Jan'20
Feb'20 Feb'20
FIIs/DIIs post net inflows for Sep’21

Mar'20
7.5
Mar'20
-8.4

Apr'20
Apr'20

18
May'20
May'20
Jun'20
Jun'20
Jul'20
Jul'20
Aug'20
Aug'20
Sep'20
Sep'20
Oct'20
Oct'20
Nov'20
Nov'20
9.6

Dec'20
Dec'20
Jan'21
 FII net inflows stood at USD1.1b in Sep’21, marking the second consecutive month of net inflows.

Jan'21
 DII net inflows stood at USD0.6b in Sep’21, implying the seventh consecutive month of net inflows.

Feb'21
-2.2

Feb'21
Mar'21
Mar'21
Apr'21
Apr'21
-1.5

May'21
May'21
Jun'21
Jun'21
Jul'21
Jul'21
-1.7

Aug'21
Aug'21
Sep'21
0.6

Sep'21
1.1

June 2020
 Key reports from MOFSL’s Research Desk

CHART BOOK | October 2021 19 June 2020

 APL APOLLO TUBES (Initiating Coverage): The new normal! (Report link)
 APL Apollo Tubes (APAT) is the largest manufacturer of Structural Steel Tubes in India, which finds application in residential and
commercial buildings, warehouses, etc. It enjoys ~50% market share in India and operates through a network of 10 plants, over
800 distributors, more than 1,500 SKUs, and 200k fabricators.
 APAT's diversified product portfolio and pan-India presence have helped mitigate the concentration risk. The higher sweating of
assets (capacity utilization at 63%) would lead to operating leverage and better profitability.

Product-wise revenue composition Product-wise volume composition

Apollo Structures Apollo Z Apollo Galv Apollo Tricoat
Apollo Structures Apollo Z Apollo Galv Apollo Tricoat Others

7% 7%
4% 5% 13% 13% 10% 14%
13% 13% 10% 3% 6%
7% 8% 16% 21% 21% 4%
7% 18% 20% 21%
18% 20% 21% 23% 5% 19%
22% 20%

69% 67% 69% 72% 67% 62%

69% 67% 69% 66% 58% 55%

FY16 FY17 FY18 FY19 FY20 FY21 FY16 FY17 FY18 FY19 FY20 FY21

Capacity additions over the years Expect 18% volume CAGR over FY21-24E
Capacities ('000MT) APL Apollo Sales Volume ('000MT) Utilization rate
91%
74% 77% 77%
72% 72%
60% 65%69% 63%64% 65%63%61%
68%
59%
51%
38% 40%
2,600
1,050
1,300
1,300
1,800
2,100
2,500

3,000
3,000
4,000

FY2… 1,837
1,130
1,339
1,633
1,640

FY2… 2,299
FY2… 2,723
198
234
274
490
500
600
800

165
195
294
464
572
682
893
931
120
53
80

48
59
76
FY08

FY21
FY06
FY07

FY09
FY10
FY11
FY12
FY13
FY14
FY15
FY16
FY17
FY18
FY19
FY20

FY22E
FY23E
FY24E

FY06
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
FY16
FY17
FY18
FY19
FY20
FY21
Source: MOFSL. Refer to our note ‘APL Apollo Tubes | Initiating Coverage (The new normal!)

CHART BOOK | October 2021 20 June 2020

 NYKAA: A unique business model on the cusp of a large opportunity (Report link)
 We analyzed Nykaa's DRHP to gauge the size of the opportunity in the Indian BPC and Fashion segments, the company's business
model, the competitive landscape, as well as key risks.
 We further conducted an online survey among the target demographic and have presented our findings. The Indian BPC/Fashion
market is expected to reach INR2t/INR8.7t by CY25 - posting a CAGR of 12.7%/18% from CY20, with the online BPC and Fashion
spaces growing at an even faster pace.
Overall Retail industry in India India’s BPC market size (INR b)
Discretionary Non-discretionary INR91t

INR63t
INR55t 66%
INR46t
67% 1,981
68% 74%
1,267 1,120
34% 868
32% 33% 26%

CY16 CY19 CY20 CY25E CY16 CY19 CY20 CY25E

India’s Online BPC sector expands 30% YoY to INR91b Global benchmarks for BPC market size and online
(USD125m) in CY20 penetration

India online BPC market (INR b) % online penetration Total BPC market (CY19, USD b) % online penetration, CY19
8% 25-35%

6%
15-20%

2% 6%

14 70 91 18 75 92
CY16 CY19 CY20
India China USA

Source: MOFSL, Refer to our note – NYKAA: A unique business model on the cusp of a large opportunity

CHART BOOK | October 2021 21 June 2020

 Paytm: Leading the FinTech Wave (Report link)
 Paytm is India’s leading payments and FinTech enterprise – it offers payments, financial services, commerce, and cloud services to
its large consumer/merchant base of ~333m/~21m. Paytm is the largest payments platform, with GMV of ~INR4t reported in FY21
(~33% CAGR over FY19–21).
 The company was launched in CY09 as a ‘mobile-first’ digital payments platform to enable cashless payments to consumers. It
started off as a digital wallet based platform initially, with a focus on mobile top-ups and utility payments.
Payment & financial services contribute ~75% to total
~14% market share in UPI transactions revenues

60% Phone Pe Google Pay Paytm Payment and financial services Commerce and cloud services
44% 46%
45% 40% 25%
35% 37%
37% 48%
30% 38%
13% 12% 14%
15%
75%
63%
0% 52%
Oct'20
June'20
May'20

Aug'20

Dec'20

June'21

Aug'21
Apr'20

July'20

Nov'20

Jan'21

Mar'21

May'21

July'21
Sep'20

Feb'21

Apr'21

FY19 FY20 FY21

Scenario-1 Media News: Proposed valuation - USD20b Scenario-2 Media News: Proposed valuation - USD25b
Commerce Commerce
Payment Financial Payment Financial
and cloud Total and cloud Total
Services Services Services Services
services services
FY24-Revenue (INR b) 62.2 15.6 24.2 101.9 FY24-Revenue (INR b) 62.2 15.6 .2 101.9

P/Sales (x)-Global Comps trading multiple 10x-13x 15x-17x 20x 14.2x P/Sales (x)- higher multiples v/s Global comps 14x-16x 18x-20x 25x 18.0x

Equity Value (INR b)-Mean 715 249 484 1,448 Equity Value (INR b)-Mean 933 296 604 1,833

Equity Value (USD b)-Mean 9.7 3.4 6.6 19.7 Equity Value (USD b)-Mean 12.7 4.0 8.2 24.9

Source: MOFSL, Refer to our note – Paytm: Leading the FinTech Wave;

CHART BOOK | October 2021 22 June 2020

 Valuations: Key observations

CHART BOOK | October 2021 23 June 2020

 Market capitalization-to-GDP ratio the highest since 2007
 The market capitalization-to-GDP ratio has been volatile. It fell to 56% (FY20 GDP) in Mar’20 from 79% in FY19 and has currently
rebounded to 115% (FY22E GDP) – above LTA of 80%. It is the highest since 2007.
 The ratio hit its peak of 149% in Dec’07 during the CY03–08 bull-run.

Market capitalization-to-GDP ratio (%)

Nominal GDP FY21/FY22E: -3%/15%
GFC: Peak of 149% in Dec’07

Highest since
Lowest 2007
since 115
the GFC
103 104
95 Average of 80% for the period
88 83 80
83
82 81 79
69
71
64 66
52 55 56
42
FY04

FY05

FY06

FY07

FY08

FY09

FY10

FY11

FY12

FY13

FY14

FY15

FY16

FY17

FY18

FY19

FY20

FY21

FY22E
CHART BOOK | October 2021 24 June 2020
 10-year G-Sec stable at ~6.2%; earnings estimates unchanged
 The 10-year G-Sec yield is currently hovering at ~6.2%, while inflation for August came in at a four-month low of 5.3% YoY.
 The EY/BY ratio is below its LTA on a forward as well as trailing basis.

2.0 Earnings yield (12-month forward)/G-Sec yield

EY/BY spiked during

the GFC It has remained below 1x for the
1.5
last six years, expect for a brief
period during the demonetization
0.73
1.0 10 Year Avg: 0.8

0.5

Aug'12

Aug'15

Mar'17

Mar'20
Jun'06

Jan'08

Jul'09

Jan'11

Feb'14

Sep'18

Sep'21
2.0
Earnings Yield (12 month trailing)/G-Sec Yield

1.6

1.2

10 Year Avg: 0.71% 0.58

0.8

0.4
Aug'09

Aug'12

Mar'14

Mar'17

Mar'20
Jul'06

Feb'08

Feb'11

Sep'15

Sep'18

Sep'21
CHART BOOK | October 2021 25 June 2020
 Spreads decline v/s US 10-year bond; FX reserves at USD638b
 The US 10 year G-sec bond yield increased 20bps to 1.5%. The India 10-year yield is trading at ~6.2%, resulting in spreads (v/s the US
10-year yield) of 470bps in Sep’21.
 On the currency front, the INR depreciated 1.7% MoM v/s the USD. FX reserves increased USD21.7b to USD638b in Sep’21.

India 10-year yield US 10-year yield Fed cuts rates to zero Fed easing,
GFC post GFC Fed raises rates US-Sino
16 India’s fiscal tightening,
5.4 trade war,
strong economic growth led by global
12 and COVID-
book and Fed raising rates
6.9 6.0 19
8

4
4.7
0.6 3.1 3.9 4.4
0

Aug'17
Mar'05

May'09

May'11

Aug'19
Jan'01

Feb'03

Apr'07

Jun'13

Jul'15

Sep'21
Forex Reserves (USD b) (RHS) USD:INR Low inflation has characterized
The Eurozone crisis, Taper Tantrum,
the period post 2015. The INR
The INR had its best run during the Pre GFC peak Yuan devaluation – the Taper Tantrum
has been relatively less volatile
2003-07 global bull-run, when GDP and in FX reserves episode in 2013 drove down the INR
90 despite several global 700
corporate earnings growth were high sharply from 55 to 68 in just four
headwinds. FX reverses are
75 and twin deficits – CAD, FD – were months. This was a period of high 525
surging.
among the lowest in two decades inflation and INR depreciation.
60 350

45 175

30 0
Mar'05

May'09

May'11

Aug'17

Aug'19
Jun'13
Jan'01

Feb'03

Apr'07

Jul'15

Sep'21
CHART BOOK | October 2021 26 June 2020
 Valuations: Nifty forward P/E and P/B at a premium to long-term mean
 Nifty 12-month forward P/E of 22.1x is at a premium of 22% v/s its LTA of 18.0x.
 At 3.3x, 12-month forward P/B for the Nifty stands at a 26% premium to its historical average of 2.7x.

12-month forward Nifty P/E (x)

30
25.3
25
22.1
20

15 Long-term average: 18x

10

Mar'14

Mar'17
Aug'09

Aug'12

Mar'20
Jul'06

Feb'08

Feb'11

Sep'15

Sep'18

Sep'21
12-month forward Nifty P/B (x)
4.4

3.6
3.3
2.7
2.8 Long-term average: 2.7x

2.0

1.2
Aug'09

Aug'12

Mar'14

Mar'17

Mar'20
Jul'06

Feb'08

Feb'11

Sep'15

Sep'18

Sep'21
CHART BOOK | October 2021 27 June 2020
 Valuations | Nifty trailing P/E at 42% premium to LPA
 12-month trailing P/E for the Nifty stands at ~27.7x, 42% higher than its LTA.
 At 3.7x, 12-month trailing P/B for the Nifty stands 26% above its historical average of 3x.

12-month trailing Nifty P/E (x)

12 month trailing Nifty P/E (x) 27.7

30

25
LT Avg: 19.6x
20

15

10

Mar'17
Aug'09

Aug'12

Mar'14

Mar'20
Jul'06

Feb'08

Feb'11

Sep'15

Sep'18

Sep'21
12-month trailing Nifty P/B (x)
5.5

4.5
3.7
3.5 Long-term average: 3x

2.5

1.5
Aug'09

Aug'12

Mar'14

Mar'17

Mar'20
Jul'06

Feb'08

Feb'11

Sep'15

Sep'18

Sep'21
CHART BOOK | October 2021 28 June 2020
 Sectoral valuations: IT at 15-year high; Private Banks above +1SD
Valuations for Private Banks above +1SD
P/B (x) Avg (x) Max (x) Min (x) +1SD -1SD
3.5
3.3
2.8
2.8 2.3 2.9

2.0 1.9

1.3
0.9
0.5
Mar'08

Mar'11

Mar'14

Mar'17

Mar'20
Sep'06

Sep'09

Sep'12

Sep'15

Sep'18

Sep'21
Technology trading at 15-year high valuation multiple
P/E (x) Avg (x) Max (x) Min (x) +1SD -1SD
36.0
29.9 29.8
28.0
21.4
20.0 17.6
13.8
12.0
7.9
4.0
Mar'08

Mar'11

Mar'14

Mar'17

Mar'20
Sep'06

Sep'09

Sep'12

Sep'15

Sep'18

Sep'21
CHART BOOK | October 2021 29 June 2020
 Sectoral valuations: Metals and O&G at premium to LTA
Metals: Valuations at 6% premium to LTA valuations
P/B (x) Avg (x) Max (x) Min (x) +1SD -1SD
5.6
4.4
4.2

2.8
2.2
1.5 1.6
1.4
0.8
0.0 0.6

Mar'17
Mar'08

Mar'11

Mar'14

Mar'20
Sep'06

Sep'09

Sep'12

Sep'15

Sep'18

Sep'21
Oil & Gas: Valuations at 8% premium to LTA valuations
P/B (x) Avg (x) Max (x) Min (x) +1SD -1SD
3.7
3.0
2.9

2.1 1.9
1.6
1.3 1.3 1.7

0.5 0.9

Mar'17
Mar'08

Mar'11

Mar'14

Mar'20
Sep'06

Sep'09

Sep'12

Sep'15

Sep'18

Sep'21
CHART BOOK | October 2021 30 June 2020
 Sectoral valuations: Consumer at 15-year high; Autos at premium to LTA
Auto valuations at 8% premium to LTA valuations
P/B (x) Avg (x) Max (x) Min (x) +1SD -1SD
5.0
4.3
4.0 3.5 3.2
3.0 3.0
2.4
2.0
1.4
1.0

0.0
Mar'08

Mar'11

Mar'14

Mar'17

Mar'20
Sep'06

Sep'09

Sep'12

Sep'15

Sep'18

Sep'21
Valuations of Consumer Staples at 15-year high valuations
P/E (x) Avg (x) Max (x) Min (x) +1SD -1SD
52.0
47.2 47.2
42.0 40.7

32.7
32.0
24.7
22.0
17.2
12.0
Mar'08

Mar'11

Mar'14

Mar'17

Mar'20
Sep'06

Sep'09

Sep'12

Sep'15

Sep'18

Sep'21
CHART BOOK | October 2021 31 June 2020
 Top ideas
Mcap EPS (INR) EPS CAGR P/E (x) P/B (x) RoE (%)
Company
(USD b) FY21 FY22E FY23E FY21-23, % FY22E FY23E FY22E FY23E FY22E FY23E
Preferred largecap stocks
Infosys 102 45.6 51.7 65.1 19.5 32.5 25.8 10.2 9.7 30.1 38.7
Hind. Unilever 85 34.8 38.4 47.5 16.9 69.9 56.5 13.3 13.3 19.0 23.6
ICICI Bank 65 24.2 30.6 38.8 26.7 22.9 18.0 2.9 2.5 13.7 15.2
St Bk of India 54 25.1 39.0 50.4 41.8 11.9 9.2 1.4 1.2 13.1 14.7
HCL Technologies 46 43.8 48.8 58.5 15.6 26.2 21.9 5.3 4.9 20.9 23.4
Larsen & Toubro 32 82.5 64.9 80.4 -1.2 26.4 21.3 3.0 2.7 11.4 12.8
UltraTech Cem. 29 190.4 243.3 276.3 20.5 30.9 27.2 4.1 3.8 14.9 15.0
Titan Company 26 11.0 17.8 29.9 64.7 121.1 72.1 23.1 20.5 20.0 30.1
Divi's Lab. 17 75.6 104.8 139.4 35.8 49.8 37.5 12.3 10.0 27.1 29.5
Godrej Consumer 14 17.3 18.9 22.7 14.7 54.5 45.3 10.6 10.0 20.0 22.8
SBI Cards 13 10.5 18.1 27.8 62.9 59.2 38.5 12.9 9.9 24.1 29.0
Preferred midcap stocks
L&T Technology 6.6 62.8 88.5 115.5 36 52.3 40.1 11.9 10.0 24.7 27.3
Cholaman.Inv.&Fn 6.2 18.5 21.4 29.3 26 26.3 19.3 4.2 3.5 17.0 19.7
Max Financial 4.7 11.0 14.1 18.0 28 71.9 56.5 3.1 2.6 18.7 20.0
Deepak Nitrite 4.4 56.9 69.4 78.2 17 37.4 33.2 11.2 8.7 34.4 29.6
J K Cements 3.3 91.0 104.4 117.4 14 31.6 28.1 5.8 5.0 19.8 19.1
APL Apollo Tubes 3.2 13.0 20.5 26.7 43 42.6 32.6 10.2 7.9 27.9 27.3
Clean Science 3.0 18.7 22.2 28.5 24 96.5 75.0 30.7 22.8 36.8 34.9
Aditya Birla Fashion 2.7 -8.0 -1.2 2.2 NM NM 109.3 10.1 9.2 -5.0 8.8
Orient Electric 0.9 5.6 6.5 8.7 24 50.4 37.5 12.6 10.2 25.0 27.2
Solara Active Pharma 0.8 45.0 79.6 100.1 49 19.8 15.7 3.0 2.5 22.4 23.4

CHART BOOK | October 2021 32 June 2020

 Quant Research & India Strategy Gallery

CHART BOOK | October 2021 33 June 2020

NOTES

June 2020
Explanation of Investment Rating
Investment Rating Expected return (over 12-month)
BUY >=15%
SELL < - 10%
NEUTRAL > - 10 % to 15%
UNDER REVIEW Rating may undergo a change
NOT RATED We have forward looking estimates for the stock but we refrain from assigning recommendation

*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.
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June 2020
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Kong & are not conducting Research Analysis in Hong Kong.

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.

June 2020