MONTHLY

SNAPSHOT FEBRUARY 2020

CBI vs CEOThe CBI & Enforcing Directorate have been investigating cases against 6 bank CEOs & MDs,

without any arrests so far. In order to strengthen governance in public sector banks, the

position of chairman & MD has been split into non-executive chairman, an MD and CEO

along with the creation of a Banks Board Bureau for arm’s length selection of non-executive

chairmen and whole time directors.

Pockets EmptyAnil Ambani, the chairman of

the Reliance Industries

claimed his net worth to be

nearly zero & no family

support when he was asked

to payback $100mn within 6

weeks against the debt

refinancing loan of $925mn

taken by him in February

2012.

Mergers & Acquisitions• Reliance Industries will

merge its media and

distribution. TV18

Broadcast, Hathway Cable

and Datacom and Den

Networks will merge into

Network18 Media and

Investments which will be net

debt free. Upon

announcement, shares of

these companies rose up to

20% on February 18th.

• The Competition Commission

of India has approved

Mahindra & Mahindra’s

acquisition of 51% in

Ardour Automotive Pvt Ltd,

creating a joint venture with

Ford Motor Co.

The visit had raised hopes

about a US India trade deal

and the Prime Minister has

assured of positive talks with

his U.S counterpart and

expects a new trade deal to

be finalised soon. In addition,

President Trump has

announced the expansion of

the defence cooperation

between the two countries

where India will purchase $3

billion of advanced military

equipment which shall

strengthen the join defence

capabilities of the two

countries.

01

India Not a Developing Country AnymoreThe United States Trade Representative considers countries with atleast 0.5% share of the

global trade, to be developed countries, hence it eliminated India and many other countries

from the list of countries that were previously eliminated from the countervailing duty

investigations.

INDIA INC.Big News on Big Names

Chanda Kochhar

ICICI Bank

Usha Ananthasubramanian

Punjab National Bank

Archana Bhargava

United Bank

Arun Kaul

UCO Bank

SBI cards has raised Rs.27.7

billion from 74 anchor

investor, ahead of its IPO

starting March 2nd. SBI cards

expects to raise more than $1

billion from the IPO.

02

Allocation (in million)

Average*

Ministry of agriculture 491,882

Ministry of

communication

314,317

Ministry of

Parliamentary affairs

203

Ministry of new and

renewable energy

27,219

Ministry of fisheries,

animal husbandry and

dairying

22,955

Ministry of steel 1,518

Ministry of textiles 52,678

Ministry of law and

justice

39,986

Ministry of civil aviation 50,272

Ministry of planning 8,494

Note: Figures refer to average allocations in the year 2014-2020

KTAs FROM BUDGET 2020Adopting a “GRADUALIST” approach towards reforms

•The finance minister announced the merger of

10 PSBs into 4 and infused a capital of

Rs.3.5lakh crores

•The top 100 institutions as per the National

Institutional Ranking Framework will come up

with a degree level full-fledged online

education program and fresh engineers will be

provided with a full one-year internship by

Urban Local Bodies to meet the skill gap

•The government allocated Rs.44 billion to

promote clean air in cities with a population of

over 1mn people

• Initiatives for MSMs

•Turnover threshold for audit increased to 5cr

•NIRVIK scheme (or ECIS) to guarantee 90%

of insurance cover

• Launch of an app for invoice financing loans

•National Logistics Policies will be released

soon with a single window clearance

The Union Budget 2020-21 was a

prudent one wherein the Government

tried to balance growth and fiscal

prudence. The Government is clearly

looking to stimulate the economy

through increased spending and tax

cuts. The new optional tax regime

introduced by the Government will be

beneficial for a section of people who

do not take benefit of deductions. As

expected the Government let fiscal

deficit slip by 50bps for FY20 and

FY21 to support growth. Key highlight

of the Budget was the Government’s

focus on boosting domestic

manufacturing as they increased import

duties on a wide range of goods which

will help domestic manufacturing

companies.

Source: Economic Times

200

113.3 110

7560

40 32 30 24 21.5

0

50

100

150

200

250

Source: Entrackr

Ramping & Growing•With 25,000 drivers and a market estimated

to be worth nearly $3 billion, Ola hit the

streets of London on 10th February and aims

to get licensed across 350 jurisdictions and

become the market leader by the end of

2021. This move comes soon after Transport

for London withdrew Uber’s license.

•Flipkart, announced ramping up its private

brand furniture selection, Perfect homes, with

an aim to target a new segment of customers

who wish to own the latest décor but may have

budgetary constraints.

Major funding raised by start-ups in the last month (In $million)

India has the 2nd largest start-up ecosystem witnessing YoY growth of around 12%.

February was no different as more than 50 companies raised more than $800mn in

capital. The start-up scene in the country is dominated by Edutech, Healthtech and Fintech

companies which was evident again as Byju’s, Unacademy and BharatPe, among others,

emerged as the frontrunners.

03

UPSTARTSNews on the New Economy

Banks make a beeline for start-upsFinance secretary Rajiv Kumar launched a

startup banking initiative by Bank of

Baroda. Baroda Startup Banking is

looking to make Bank of Baroda a

preferred banking partner for the startup

community. It aims to establish connects

with at least 2,000 startups over the next

two years, the bank said in a statement.

He also said banks across the country will

be encouraged to partner with startups

and handhold them in “rewarding

innovation”.

HDFC Bank aims to be a dominant and

go-to bank for startups, a key official

said on Tuesday. Close to 9,000 startups

are currently banking with HDFC Bank,

which now has dedicated "SmartUp"

zones in 70 branches in 30 cities across

India. HDFC Bank on Tuesday disbursed

SmartUp grants totalling Rs five crore to

20 startups in Bengaluru working in the

social sector.

Budget Bonanza for startupsFor startups with a turnover of up to Rs.1 billion,

a 100% tax deduction was announced for 3

consecutive years. Along with this, the Union

Budget proposed to defer tax deducted at

source (TDS) on shares allotted by the startups to

their employees under the Employee Stock

Option Plans (ESOPs) which will provide the

employees exercising these ESOPs the flexibility

to pay taxes at a later date

Harvard

epidemiologist Marc

Lipsitch has

estimated the virus

could infect 40-70%

of the global

population

CORONAVIRUS GLOBAL IMPACTBringing the Factories of the World to a Standstill

229

90 81 61 53 35 30 220

200

400

600

800

1000

1200

0 1 2 3 4 5 6 7 8 9 10Japan Singapore

US

-0.1 to -0.2 Japan

-0.3

Chile

-0.6

China

-0.7

Korea

-0.5

Australia

-0.5

Eurozone &

UK

-0.1 to -0.2

Hong Kong

-1.2

Thailand

-0.6Singapore

-0.6

Taiwan

-0.5

Coronavirus Outbreak will Impact India

Inc.’s Q1 Results: Centrum Broking’s

Nischal MaheshwariFinding their way out•¥1.7tn has been infused into the banking

system by the People’s Bank of China

•Loans worth ¥300bn provided to medical

equipment producers at cheaper rate,

reduced from 3.2% to 1.6%

•Credit support has been provided to firms

in the form of loans worth ¥349bn

•Bonds worth ¥5bn to support medical

supplies & emergency loans worth

¥10.07bn have been issued by the

Agricultural Development Bank

According to a CII analysis, China supplies

43% of India’s imports of the top 20

goods, including mobile handsets ($7.2bn

import from China), computers ($3bn),

integrated circuits and other inputs ($7.5

bn), fertilizers ($1.5bn), API ($1.4bn) and

antibiotics ($1.1bn).Percentage point (PPT) change from baseline

<0.5 0.5 to 1.0 >1.0

Cumulative cases reported outside China

Total Cases Reported: 81,191 as on 27th Feb, 2020

PO

SITIVE IM

PAC

TN

EGA

TIV

E IM

PAC

T

AustraliaItaly United

States

ThailandTaiwanIranHong

Kong

850

893

South

Korea

Estimated Reduction in GDP Growth

Cement Power Oil & Gas Gems & Jewelry Iron & Steel Industry Metal Industry

04

Source: Reuters

Source: Business Today

Company Underweight Neutral Overweight

Goldman Sachs

Economic and earnings growth are expected to be moderate and hence decent

risky asset returns. But along with this numerous risks and challenging valuations

limit the upside

Citi Bank

There are low expectations for risks to decrease but no chance of a global

recession in 2020. Global growth is expected to settle in around 2.7% YoY in

2020 & 2021, as per Citi’s economists as soon as global manufacturing

activities are revived

Morgan Stanley

An uneven global recovery with uneven valuations is expected in 2020.

However, expansionary monetary policies & trade stabilization will help boost

global growth, but will only stabilize GDP growth in the US at 1.8%

Deutsche Bank

Years with sharp gains as seen in 2019 aren’t expected to fall, but rise in a

modest manner, hence 2020 should be approached positively

BlackRock

Investment

They expect growth higher growth in 2020 with limited recession risks. The best

case is to go about things mildly, supported by easy financial conditions and a

slight rise in US inflation pressures

JP Morgan &

Chase Co

Positive drivers will continue at least for the first half of 2020, with some

negatives that will dominate the second half. Returns are expected to be worse

than 2019, which was still able to deliver above average gains in all sectors

except commodities & EM FX

HSBC

The base scenario for 2020 is favourable with slow & steady growth,

expansionary policies, low inflation & single digit profit growth. Recession isn’t

expected to take place until 2021

05

GLOBAL ECONOMIC OUTLOOK 2020Baseline Expectations from the Biggest Asset Managers of the World

Source: Bloomberg

22.019.9 19.2

17.6 16.9 17.0

1.4 1.0 1.0 1.2 1.6 1.7

9.8 10.511.4 11.7 11.4 11.5

FY13 FY14 FY15 FY16 FY17 FY18

Household savings (% of GNDI) Public sector savings (% of GNDI) Private Corporate Savings (% of GNDI)

The dramatic fall in the domestic savings

rate in the economy, signals toward a lack of

resources in the economy to fund a revival in

investments and commercial activity, as the

economy continues to slow. The rates are a

gauge of how much domestic funds

government and businesses can access for

investments.

Both the old and the new GDP series data

suggest that the savings rate has been

declining since the global crash of 2008,

with the new series suggesting that the drop

may be less steep than what the old series

reported. In 2017-18, the fall in the savings

rate was arrested, primarily due to higher

corporate savings.

Perhaps the most common call ahead of the

budget was for greater government

spending to boost waning consumption. That

stimulus has not come as overall government

spending growth in FY2021, although higher

than the five-year trend, is budgeted to be

lower than the ongoing financial year.

Private consumption growth picked up in

the third quarter, and so did gross fixed

capital formation or private investment after

falling for 4 quarters. Given that bank

credit offtake remained lackluster at about

6.8%, it appears that investments too are

unlikely to lift the sagging economy in

Q4FY20. To read our interesting take on

this, click here.

06

A SAGA OF ECONOMIC INDICATORSPrivate Sector Comes to the Rescue

2,691 3,638 3,686 3,203 3,259 3,876 4,086 3,411 3,687 4,219 4,726

5.7%6.3%

7.2%

7.7%

8.2%7.1% 6.6%

5.8%5.0% 4.5% 4.7%

-2.7%

0.9%

4.9%

8.7%

-1.8%-0.4%

4.8%1.1%

-1.1%

-8.5%

3.7%

-10.0%

-8.0%

-6.0%

-4.0%

-2.0%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

Q1FY18 Q2FY18 Q3FY18 Q4FY18 Q1FY19 Q2FY19 Q3FY19 Q4FY19 Q1FY20 Q2FY20 Q3 FY20

0

500

1000

1500

2000

2500

3000

3500

4000

4500

5000

Government Expenditure (INR billion) GDP growth (%) Gross Fixed Capital Formation (%)

Source: OECD

Source: OECD, Tradingeconomics

Retail inflation has breached the Reserve

Bank of India's medium-term target of 4%

for the fourth straight month. Around two-

thirds of India's population depends on the

rural sector, and rising inflation suggests

pricing power is returning to the hands of

the farmers. WPI increased driven by

higher prices of manufactured products

and key transportation fuels.

RBI Chief Das reiterated the monetary policy

committee’s (MPC) intent in terms of the

accommodative stance. “This time also, the

MPC, while recognizing that inflation has

spiked and we need to wait for more data

to see that moderation in inflation is well

entrenched. The MPC does recognize very

clearly that there is space for rate cuts," he

said.

The continuous contraction in India’s exports

is likely to stop next year, but the rate of

growth will be subdued on account of the

uncertain global trade situation due to

rising protectionism. The positive growth in

the exports of non-conventional commodity

groups like electronic goods, drugs, and

pharmaceuticals, organic and inorganic

chemicals, augur well for future growth.

Apex exporters body Federation of Indian

Export Organisation said the global

situation is becoming extremely challenging

as rising protectionism is leading to

uncertainty. “If the global situation

improves, we may look for 15% growth in

exports next year. Exports will come out of

negative zone but the rate of growth will

not be in double digits” said FIEO Director

General Ajay Sahai.

A SAGA OF ECONOMIC INDICATORSIndia’s growth engines take a break

07

2.8 2.93.1 2.9

2.8 2.0

1.2

1.10.3 0.2

0.6

2.63.1

2.02.6 2.9

2.9 3.2 3.2 3.34.0

4.6

5.5

7.4 7.6

2.5

1.6 0.2

2.7

3.2

4.5

1.3

4.9

-1.4

-4.3 -4.0

1.8

-0.3

-6.00

-4.00

-2.00

0.00

2.00

4.00

6.00

8.00

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

WPI (%) CPI (%) IIP (%)

36.3

43.445.4

40.3 39.8 39.636.9 37.4 38.1 38.6

41.1

32.6

26.130.0

25.0 26.3 26.1 26.0 26.4 26.0 27.4 26.0

0

5

10

15

20

25

30

35

40

45

50

Mar-19 Apr-19 May-19 Jun-19 Jul-19 Aug-19 Sep-19 Oct-19 Nov-19 Dec-19 Jan-20

Imports ($ billion) Exports ($ billion)Source: Tradingeconomics

Source: OEA, Tradingeconomics

GST collections crossed the Rs. 1

lakh crore mark after 3 months

on grounds of festive sales. GST

collection on domestic

transactions grew by 12%.

Improved collections indicate

signs of economic revival.

1139

10039991020

982

919

954

1035 1032

1108

900

950

1000

1050

1100

1150

1200

April May June July Aug Sep Oct Nov Dec Jan

GST collections (in Rs. billion)

23.0

23.2

23.4

23.5

23.7

23.8

23.6

23.4

22.6

22.8

23.0

23.2

23.4

23.6

23.8

24.0

2012 2013 2014 2015 2016 2017 2018 2019

Female labour force participation rate (%)

8.38.1

8.6

7.8

7.2

6.9

7.7

7.0

6.0

6.5

7.0

7.5

8.0

8.5

9.0

2012 2013 2014 2015 2016 2017 2018 2019

Long Term Interest Rate (%)

7272

39413504 3444 3411

0

1000

2000

3000

4000

5000

6000

7000

8000

Infrastructure Spending (Rs. billion)

-1.74%

-3.02%

-3.68%

-4.16%

-4.82%

-2.58%

NASDAQ 100

S&P 500

FTSE 100

DJIA

MSCI Japan

Nikkei 225

19622284

2768

3348

3951

49445357

145166

191

217231

251265

0

50

100

150

200

250

300

0

1000

2000

3000

4000

5000

6000

2013 2014 2015 2016 2017 2018 2019

Real Estate Loan Exposure (Rs. Billion)

All India Housing Price Index

-0.56%

-8.91%

-3.84%

-1.30%

-1.96%

-2.46%

2.59%

NIFTY Financial Services

NIFTYAuto

INFTYMetal

NIFTY Bank

NIFTY FMCG

NIFTY Pharma

NIFTY IT

THE ECONOMY IN SNIPPETSBringing You Up to Speed

Rate cuts have not been as

impactful as initially hoped, as

banks are not passing the lower

rate to consumers, and there

are still challenges in reviving

domestic consumption.

India’s low LFPR was already a

matter of concern in 2011-12.

The further fall since then comes

mainly from rural areas where

female LFPR crashed by 7%,

while male LFPR remained

roughly the same.

The government still has one

more arrow in its quiver -

infrastructure spending. It is

planning to spend Rs. 100 lakh

crore on infrastructure projects

in the next five years to boost

rural employment.

Increasing Real Estate exposure

and rising prices suggest an

asset bubble forming.

Market across the world bled as

fears of a global pandemic

seemed confirmed. However if

the authorities manage to

contain the virus soon then it will

be a major positive

development for the markets.

Sectoral benchmark indices

ended the week in deep red on

Friday as investors and traders

fretted over the fast-spreading

coronavirus and its impact on

global economic growth. India

VIX, the barometer of fear in

the markets, spiked 28.75% to

22.87.

08

Source:

1. OECD

2. World Bank

3. pppinindia.gov.in

4. RBI, Economic Times

5. pib.gov.in

6. Investing.com

7. nseindia.com

09

OPINION POLLThe Experts’ take

“I have met a few customers who are

saying that because this supply chain

is getting disturbed both for internal

consumption and for external

exports, they would have to take

shut downs of their plants. Economy

is all about circulation and if the

circulation stops, it will have an

impact.”

- Mr. CP Gurnani, MD & CEO of

Tech Mahindra

“Auto makers are dependent on China for certain

auto components. These shipments have not been

coming to India because of Coronavirus. This is the

situation with white goods category as well. So,

the domestic supply chain has also gotten

affected.”

- Nikunj Turakhia, President, Steel Users

Federation of India (SUFI)

“At present a 7 per cent GDP growth

number looks quite distant and may take

us about 24 months to scale provided

there are no shocks and the government

responds with proactive policies.”

- Nimesh Shah, Managing Director and

CEO, ICICI Prudential Mutual Fund

“There is some support to growth,

but not enough to give a material

impetus in the short term.”

-Ashu Suyash, Managing Director

and CEO, Crisil

“India will be 6.5%, ahead of

China‟s 5.8%, which will make us

once again the fastest-growing

economy in the world, I guess it‟s

one of those cases of is the glass

half-full or half-empty,

everybody’s looking at the bad

news, and I think that’s become a

default thing.”

- Anand Mahindra, CEO of

Mahindra Group

Mon Tues Wed Thurs Fri Sat Sun

March 2020

1 2 3 4 5 6 7

8 9 10 11 12 13 14

15 16 17 18 19 20 21

22 23 24 25 26 27 28

29 30 31

Balance of

Trade (Jan)

US

Inflation Rate

YoY (Feb)

CN

Inflation Rate

YoY (Feb)

US

Retail Sales

MoM (Feb)

US

Fed Interest

Rate Decision

US

Loan Prime Rate

1Y

CN

Inflation Rate

YoY (Feb)

GB

GDP Growth

Rate QoQ

Final Q4

US

Personal Income

& Spending

MoM (Feb)

US

GDP Growth

Rate YoY

Final Q4

GB

Ranks Company NameRevenue CAGR

(2015-18)

Revenue 2018

(Rs. Cr.)

1 One 97 / Paytm 311% 3,232

2 GoBOLT 257% 54

3 Saankhya Labs 254% 73

4 Razorpay 243% 197

5 OfBusiness 242% 645

6 LogiNext 152% 17

7 JetSetGo 147% 107

8 Siyaram Impex 127% 65

9 BYJU'S 127% 1281

10 Videonetics 127% 52

FASTEST GROWING COMPANIES IN INDIALeading the “Soon-icorn” Race

ECONOMIC CALENDAR

10

Source: Statista

Source: Investing.com

The information and opinions contained herein have been compiled or arrived at, based upon information obtained from reliable sources.Such information has not been independently verified and no guarantee, representation of warranty, express or implied, is made as to itsaccuracy, completeness or correctness. All such information and opinions are subject to change without notice. Leveraged Growth, itsdirectors, analysts or employees do not take any responsibility, financial or otherwise, of the losses or the damages sustained due to theinvestments made or any action taken on basis of this report. Leveraged Growth and its directors, associates, employees may or may nothave any positions in any of the stocks dealt with in the report.This report is only for PRIVATE CIRCULATION.For suggestions, clarifications & your valuable feedback write back to us at aswinibajaj.lg@gmail.com

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