Economy

UPDATE January 10, 2023

FY24 Budget - A year of normalization Exhibit A: India’s fiscal deficit to end

up at 6.8% in FY23 & fall to 5.9% in
FY23 was characterized by a significant jump in both revenue and FY24
expenditure from what was initially budgeted. While higher inflation
and need to support bottom-of-pyramid population led to significant

9.2%
deviation in government welfare spend (+Rs3.2trn or 1.2% of GDP),

Fiscal Deficit (% of

6.8%
6.7%
6.4%
tax revenue too got a fillip. We expect government to end up with

5.9%
5.9%
4.9%
4.9%

4.7%
4.5%
fiscal deficit of 6.8% of GDP in FY23 (6.4% initially budgeted). For

4.1%
3.9%
GDP)

3.5%
3.5%
3.4%
FY24, we expect normalization in both expenditure and tax revenue
growth. While total expenditure should grow 4.3% YoY mainly due to
lower subsidy outgo, gross tax revenue growth should slow to 10.5%
YoY from 12% in FY23 mainly on lower nominal GDP growth. On-

FY24…
FY11

FY13

FY15

FY17

FY19

FY21

FY23BE
budget capex is expected to grow 20% YoY in FY24 (27% in FY23), but
off-budget capex may continue to see reduced allocation. Thus,
government is likely to target fiscal deficit of 5.9% of GDP in FY24.
Source: Union Budget Documents, Ambit Capital
research. Note: BE- Budgeted Estimates
Subsidy bill to fall significantly in FY24
The government’s welfare spends touched a record high in FY23 driven by Exhibit B: Welfare spending is set to
higher-than-budgeted spend on fertilizer, food & petroleum subsidies and normalize in FY24
MGNREGA. As international commodity prices cool and as the government
has decided to discontinue the free food grain program, overall welfare spend

4.4%
Welfare spending (%
is likely to contract 35% YoY in FY24. Therefore, despite a 20% YoY increase

2.9%

2.9%
in on-budget capex, total expenditure growth should be capped at just 4.3%

2.8%
2.8%
2.7%
2.6%

2.6%
2.5%
2.2%
2.0%
YoY (vs 16.6% CAGR in the last three years).

1.8%
of GDP)

1.7%

1.7%
1.6%
1.4%
1.4%
Overall capex will be the key metric to watch
While on-budget capex posted 30.8% CAGR over the last three years, off-

FY24…
FY09

FY11

FY13

FY15

FY17

FY19

FY21

FY23BE
budget capex contracted by 10%, bringing overall central government capex
growth to 7.7%. We expect this trend to continue in FY24. While on-budget
capex should grow 20% YoY in FY24, allocation to off-budget capex is likely to
contract by 8-10%, bringing overall capex growth down. Roads, railways and Source: CEIC, Ambit Capital research. Note- Welfare
defence are likely to be the sectors continuing to witness largest allocation. spending involves Subsidies, MGNREGA spending and
PM KISAN
Apart from these, PM Awas Yojna (housing scheme) and tap water scheme are
likely to see higher allocation and renewed push going into elections in 2024.
Exhibit C: Off-budget capex could
Tax revenue growth to normalize remain a drag on overall govt. capex
FY23 saw a significant increase in tax revenue growth as the pace of
formalization picked up and inflation helped increase GST collections. On Off Budget Total
38.4%

revenue, we expect gross tax revenue growth to slow to 10.5% YoY in FY24
growth (3yr CAGR)

26.9%
Centre's Capex

25.0%

23.7%

(from 11.7% in FY23) as nominal GDP growth slows and high base effect kicks
17.3%

16.0%

in. This slowdown will be led by direct tax collection growth (corporate/income
7.7%
6.7%
1.2%

tax), which we expect to slow to 9.5% in FY24 (from 17.1% in FY23).

Moreover, on non-tax revenue, the government has little scope to build in
significant growth in revenues, especially disinvestments where it missed -7.7% -6.2% -9.9%
budgeted targets by a huge margin in the past few years.
FY18

FY19

FY20

FY21

FY22

FY23

Borrowings to remain elevated

Source: Union Budget Documents, Ambit Capital
The central government’s total debt to GDP stands at 55% currently (FRBM research
mandated central government debt is 40% of GDP). Its gross borrowing as a Research Analysts
% of GDP jumped to 5.2% in FY23 (and is expected to be 4.5% in FY24) from
Sumit Shekhar
3.5% in FY20. As borrowing remains elevated for the fourth year in a row and
private sector credit demand picks up, borrowing cost should remain elevated, +91 22 6623 3229
especially as we expect another 50bps hike in policy repo rate to 6.75%. sumit.shekhar@ambit.co

Eashaan Nair
+91 22 6623 3033
eashaan.nair@ambit.co
darshan@tcgamc.com
Ambit Capital and/or its affiliates do and seek to do business including investment banking with companies covered in its research reports. As a result, investors should be aware that Ambit Capital may
have a conflict of interest that could affect the objectivity of this report. All Investors including US Investors should not consider this report as the only factor in making their investment decision.
Please refer to the Disclaimers and Disclosures at the end of this Report.
 Economy

Fiscal deficit to overshoot original target

FY23 is likely to be characterized by a significant deviation in both
expenditure and revenue vs what was initially budgeted. The government’s
total expenditure is likely to be higher by Rs3.2trn (or 1.2% of GDP) mainly
on higher subsidy outgo (food, fertilizer, petroleum) and higher allocation to
Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA).
On the other hand, tax revenue growth (indirect and direct) was much ahead
of initially budgeted. While direct taxes are expected to register growth of
17.1% in FY23 (vs 13.6% budgeted), GST too is likely to be 21.1% (vs 15.6%
budgeted). However, the government is also likely to collect less than
budgeted amount on union excise duty, disinvestments and RBI dividend.
Taking these into account, we believe fiscal deficit for FY23 will be 6.8% of
GDP as against 6.4% budgeted. (see table below).
Exhibit 1: Higher expenditure commitment to push fiscal deficit to 6.8% of GDP in FY23
Rs trn YoY growth
Union Budget Model FY21 over FY22 over FY23 Ambit over
FY21 FY22 FY23BE FY23 Ambit
FY20 FY21 FY22
Total Expenditure (A=B+C) 35.1 37.9 39.4 42.6 31% 8% 12.3%
Revex (B=1+2+3+4+5+6+7) 30.8 32 31.9 35.1 31% 4% 9.7%
Petroleum Subsidy (1) 0.4 0.0 0.1 0.3 0% -91% 713.0%
Food Subsidy (2) 5.4 2.9 2.1 3.3 398% -47% 14.2%
Fertilizer subsidies (3) 1.3 1.4 1.1 2.5 58% 10% 78.4%
Interest payments (4) 6.8 8.1 9.4 9.4 11% 18% 16.8%
PM KISAN (5) 0.6 0.7 0.7 0.7 25% 11% 0.7%
Allocation to MGNREGA (6) 1.1 1.1 0.7 1.0 82% -5% -6.0%
Discretionary revex (7) 15.2 17.9 18.0 18.0 9% 17% 0.3%
Capex (C) 4.3 5.9 7.5 7.5 27% 39% 26.6%
Total Receipts (D = 8 + 9+
16.9 2.1 22.8 24.0 -3% 31% 8.8%
10+11)
Net tax revenue (8) 14.3 18.2 19.3 21.2 5% 28% 16.3%
Gross Tax Revenue 20.3 27.1 27.5 30.2 1% 34% 11.7%
Corporate Tax 4.6 7.1 7.2 8.2 -18% 56% 15.2%
Income Tax 4.7 6.7 7.0 8.0 -2% 43% 19.2%
Indirect taxes (a+b+c+d) 10.7 12.9 13.3 13.6 13% 20% 5.3%
a)Customs 1.3 2.0 2.1 2.3 23% 48% 15.5%
b)Union Excise 3.9 3.9 3.4 2.8 63% 0% -28.2%
c)GST 5.5 7.0 7.8 8.5 -8% 28% 21.1%
Other Taxes 0.2 0.3 0.0 0.4 24% 26% 37.1%
Disinvestment (9) 0.3 0.1 0.7 0.4 -35% -59% 195.6%
Telecom-related receipts (10) 0.5 0.7 0.53 0.5 -35% 58% -36.2%
Other receipts (11) 1.9 3.0 2.3 2.0 -32% 61% -34.6%
Fiscal Deficit (as a % of GDP) 9.2% 6.7% 6.4% 6.8% 97% -27% 2.0%
Fiscal Deficit (E = A - D) 18 16 16.6 18.6 95% -13% 17.3%
Nominal GDP 198.0 236.4 257.9 273.1 -1% 19% 15.0%
Source: Union Budget Documents, CGA, Ambit Capital research. Note- (1) Rs4.4trn net cash outflow approval has been sought for by the government which will
include expenditure on fertilizer, MGNREGA, food subsidy, petroleum subsidy. (2)Nominal GDP is expected to grow by 15% (3) Other receipts saw an additional
inflow of Rs0.4trn, which is the surplus transferred by RBI. (4) Other taxes include Hydrocarbon production tax imposed by the government, which we believe
would amount to Rs400bn in FY23 (5) FY23 Assumptions based on current government fiscal prudence & commentary and historical data. (6) (Ambit) refers to
Ambit’s forecast for FY22.

Spending growth to moderate in the rest of FY23

The government seems to have front-loaded expenditure in FY23. Total expenditure
growth during Apr-Nov of the current fiscal has been 18% YoY with capex growth at
an impressive 63% YoY. Our calculations suggest that during the remainder of the
year (Dec-Mar), total government expenditure will slow down to 6% YoY with capex at
-5% YoY (see exhibit below).
darshan@tcgamc.com

January 10, 2023 Ambit Capital Pvt. Ltd. Page 2

 Economy

Exhibit 2: Both capex and revex growth… Exhibit 3: …expected to moderate in last 4 months

63.4% 8.3%
FY23 Apr-Nov growth (YoY)

FY23E Dec-Mar YoY growth

5.8%

17.7%
10.8%

-5.0%
Revex

Capex

Revex

Capex
Total Expenditure

Total Expenditure
Source: CGA, Ambit Capital research. Note- Data up to Nov of FY22 and FY24 Source: CGA, Ambit Capital research. Note; Spending that would be
achieved in FY23- Revex: Rs35.1trn, Total Expenditure:Rs42.6trn an
Capex:Rs7.5trn.

Higher-than-expected outgo on subsidies

Higher global commodity prices and need to support the bottom of the pyramid
population drove subsidy expenditure to record levels in FY23. Revenue expenditure
of the government is likely to be higher by Rs3.2trn (or 1.2% of GDP) mainly on
account of higher outgo on food, fertilizer, petroleum and MGNREGA. Moreover,
despite higher revex commitments, the government didn’t cut back on capex, which
grew briskly in FY23 (see exhibit below).
Exhibit 4: Several circumstances led to the government Exhibit 5: The government continued with its capex spree
increasing its welfare spending in FY23

378% Capex (LHS) 3yr CAGR (RHS)

FY23 Estimated expenditure

5 30%
over budgeted (in %)

4 25%
138%
69% 52% 20%
37% 3
10%
Rs trn

%
15%
2
MGNREGA
Petroleum

Fertiliser Subsidy

Food Subsidy

Welfare Spending

Revex
allocation

10%
Subsidy

1 5%

0 0%
FY13
FY14
FY15
FY16
FY17
FY18
FY19
FY20
FY21
FY22
FY23

Source: CGA, CEIC, Ambit Capital research. Note- Welfare Spending= Source: CGA, CEIC, Ambit Capital research. Note- Data is up to Nov of
Subsidies + MGNREGA & PM KISAN allocation every FY

Another interesting trend witnessed in government expenditure is that large ministries

like chemicals & fertilizers, railways and road transport are witnessing much higher
expenditure than budgeted while smaller ministries like skill development, heavy
industries and renewables have not been able to complete even 40% of their
budgeted targets (see exhibit below).

darshan@tcgamc.com

January 10, 2023 Ambit Capital Pvt. Ltd. Page 3

 Economy

Exhibit 6: While ministries with huge budget are on Exhibit 7: …several ministries that have low budgets have
course to achieve their spending targets… had subdued expenditure

160% 60%
Ministry wise budgeted
spending achieved (%)

Ministry wise budgeted

spending achieved (%)
140% 50%
120%
100% 40%
80% 30%
60%
40% 20%
20% 10%
0%
0%

Fishery & Animal…

Railways
Roadways

Communications

Housing & Urban

Chemicals

Defence

Education

Health
Rural Development
Consumer Affairs

Agriculture
Agriculture

Renewable
Earth Sciences

Social Justice

NE Development
Law & Justice

IT

Minority Affairs
Cooperation
Heavy Industries

Skill Development
Food processing
Petroleum
Source: CGA, Ambit Capital research. Note – 1) Data up to Nov’22 2) Source: CGA, Ambit Capital research. Note – 1) Data up to Nov’22 2)
Ministry’s budgeted allocation should be at least >Rs750bn Ministry’s budgeted allocation is <Rs200bn

Tax collections to positively surprise

The government, at the start of the year, was conservative in building tax revenue
growth estimates (only 9.3% growth in gross tax revenue) as it projected 11% YoY
growth in nominal GDP. Nominal GDP is likely to grow at 15.5% YoY in FY23.
Exhibit 8: The government’s revenue expectations were conservative in the FY22
budget

13.4% 13.8% 12.7% 14.7%

9.6%
FY23BE over FY22RE

-15.0%
Customs

Union Excise

GST
Income Tax
Corporate Tax

Gross Tax Direct Tax Indirect taxes

Revenue

Source: CGA, Budget Documents, Ambit Capital research.

Government tax revenue growth is set to beat budget estimates, especially direct
taxes (corporate tax and income tax) and GST. However, there has also been loss of
revenue compared to what the government had budgeted at the start of the year. The
government is likely to collect Rs800bn less than budgeted under excise duty as duty
was cut when crude prices rose (see exhibit below).

darshan@tcgamc.com

January 10, 2023 Ambit Capital Pvt. Ltd. Page 4

 Economy

Exhibit 9: Except excise duty, all other tax components will Exhibit 10: Government lost ~Rs0.8trn of revenue due to
beat budgeted expectations excise duty cut on petrol & diesel in May’22

20% Without rate cuts With rate cuts

14% 15%
FY23E growth over FY23BE

15% 10% 9%
8%

Excise duty collections from

10% 3.6

Petrol and Diesel in FY23

5% 2%
0% 2.8
-5%
(%)

-10% 2.3

(Rs trn)
-15% 1.8
-20% -16% 1.4
Customs

GST
Union Excise
1.0
Gross Tax

Income Tax
Corporate Tax

Indirect taxes

Petrol Diesel Total

Source: CEIC, CGA, Ambit Capital research. Note- BE: Budgeted Estimate, Source: PIB, PPAC, Ambit Capital research. Note- 1) Consumption of Petrol
E- Ambit Expectations and diesel for the whole of FY23 is based on the average consumption in
FY23YTD. 2) The government slashed excise duty on petrol and diesel by
Rs8 & Rs6 per litre in May’22

Greater formalization drove tax revenue growth

Higher-than-expected growth in direct tax (corporate tax and personal income tax)
and GST collection was driven by healthy performance of the formal sector. Formal
sector jobs recovered at a brisk pace and so did profits from firms in the organized
sector. On the other hand, GST collections got a fillip from higher inflation and
tighter compliance (see exhibits below).

Exhibit 11: India’s formal sector has Exhibit 12: Corporate profits too have Exhibit 13: GST registrations have
been rapidly adding jobs been strong significantly increased in recent years

Rs trn (LHS) YoY growth (RHS)

5.2
4.7

11.7
4.3
subscribers (in mn)

registrationss by
3.7

14 60%
3.5

MSMEs (in mn)

3.4
Net new EPFO

companies gross
2.6

2.4

BSE500 ex-BFSI

Total GST

40%
2.3

2.1
2.0
1.9

Gross profit YoY

1.4

20% 5.1
9
profit

0% 3.5
growth

2.6
-20% 1 1.3
-0.4

4 -40%
2QFY16
2QFY17
2QFY18
2QFY19
2QFY20
2QFY21
2QFY22
2QFY23
1QFY20

3QFY20

1QFY21

3QFY21

1QFY22

3QFY22

1QFY23

Jun'21
Oct'20

Dec'20

Mar'21

Oct'22
Sep'21

Source: EPFO, Ambit Capital research. Note- 1) Source: Ace Equity, Ambit Capital research Source: MSME ministry, Ambit Capital research.
EPFO- Employee Provident Fund Organization 2) Note: MSME- Micro, Small and Medium Enterprises
Net EPFO- News Subscribers + Those who rejoined
the scheme - Those who left the scheme

Despite RBI transferring lower-than-budgeted dividends to the government, non-tax

revenues are going to exceed budgeted amount due to windfall tax imposed on
petroleum products and higher dividends from Central Public Sector Enterprises
(CPSEs) (see exhibits below).

darshan@tcgamc.com

January 10, 2023 Ambit Capital Pvt. Ltd. Page 5

 Economy

Exhibit 14: Government is set to lose revenue in several non-tax components

Budgeted Estimated
FY23 Major Non tax revenue

739
components (Rs bn)

650
528
459
400 400
303

Production tax Disinvestment (9) Telecom receipts RBI Dividend

Surplus revenue Deficit revenue

Source: Media Articles, DIPAM, Ambit Capital research. Note- Production tax refers to tax imposed on Oil
companies for production of oil and export of Petrol, Diesel & Aviation fuel

Exhibit 15: The government may receive more than Exhibit 16: CPSE made significant profits in FY22
budgeted non-RBI dividends in FY23

Budgeted Achieved Nifty CPSE Profits (LHS) YoY growth (RHS)

government in FY23YTD (Rs

7 25%
Dividends received by the

1,139
6 20%

YoY growth
5 15%
739
Rs trn

683 4 10%
bn)

3 5%
400 380
303 2 0%
1 -5%
0 -10%
FY11
FY12
FY13
FY14
FY15
FY16
FY17
FY18
FY19
FY20
FY21
FY22
Total RBI Rest

Source: CGA, Ambit Capital research. Note- Data up to Nov’22 Source: ACE Equity, Ambit Capital research. Note- LIC has been excluded

Taking these into consideration, the fiscal deficit as a % of GDP is projected at 6.8%
as against 6.4% budgeted.

darshan@tcgamc.com

January 10, 2023 Ambit Capital Pvt. Ltd. Page 6

 Economy

FY24: The year of normalization

FY24 is most likely to be a year of normalization, for both expenditure and
revenues. Total expenditure growth in FY23 is likely to be 12% YoY (from 5%
budgeted) mainly on account of higher subsidy outgo. We estimate that total
expenditure growth in FY24 will be 4.3% YoY. This is mainly on account of
revenue expenditure growth slowing from 9.7% YoY in FY23 to 1% in FY24 as
major subsidies like fertilizer and food will need lower allocation. On the
other hand, gross tax revenue growth will slow from 11.7% YoY in FY23 to
10.5% in FY24 as nominal GDP is expected to slow down from 15% YoY in
FY23 to 11% in FY24 due to lower inflation (see table below).
Exhibit 17: The government is likely to target a fiscal deficit target of 5.9% of GDP in FY24
Rs trn YoY growth
Union Budget Model FY24 (Ambit)
FY23 FY24 FY21 over FY22 over FY23 (Ambit)
FY21 FY22 FY23BE over FY23
Ambit Ambit FY20 FY21 over FY22
(Ambit)
Total Expenditure
35.1 37.9 39.4 42.6 44.5 31% 8% 12.3% 4.3%
(A=B+C)
Revex
30.8 32.0 31.9 35.1 35.5 31% 4% 9.7% 1.0%
(B=1+2+3+4+5+6+7)
Petroleum Subsidy (1) 0.4 0.0 0.1 0.3 0.2 0% -91% 713.0% -28.1%
Food Subsidy (2) 5.4 2.9 2.1 3.3 2.1 398% -47% 14.2% -36.4%
Fertilizer subsidies (3) 1.3 1.4 1.1 2.5 1.0 58% 10% 78.4% -60.0%
Interest payments (4) 6.8 8.1 9.4 9.4 10.3 11% 18% 16.8% 9.1%
PM KISAN (5) 0.61 0.68 0.68 0.7 0.8 25% 11% 0.7% 10.3%
Allocation to MGNREGA (6) 1.1 1.1 0.7 1.0 1.0 82% -5% -6.0% 0.0%
Discretionary revex (7) 15.2 17.9 18.0 18.0 20.2 9% 17% 0.3% 12.3%
Capex (C) 4.3 5.9 7.5 7.5 9.0 27% 39% 26.6% 20.0%
Total Receipts (D = 8 +
16.9 22.1 22.8 24.0 26.6 -3% 31% 8.8% 10.7%
9+ 10+11)
Net tax revenue (8) 14.3 18.2 19.3 21.2 23.5 5% 28% 16.3% 10.9%
Gross Tax Revenue 20.3 27.1 27.5 30.2 33.4 1% 34% 11.7% 10.5%
Corporate Tax 4.6 7.1 7.2 8.2 8.9 -18% 56% 15.2% 9.0%
Income Tax 4.7 6.7 7.0 8.0 8.8 -2% 43% 19.2% 10.0%
Indirect taxes (a+b+c) 10.7 12.9 13.3 13.6 15.3 13% 20% 5.3% 12.3%
a)Customs 1.3 2.0 2.1 2.3 2.5 23% 48% 15.5% 6.9%
b)Union Excise 3.9 3.9 3.4 2.8 3.4 63% 0% -28.2% 21.0%
c)GST 5.5 7.0 7.8 8.5 9.4 -8% 28% 21.1% 10.9%
Other Taxes 0.2 0.3 0.0 0.4 0.4 24% 26% 37.1% -8.9%
Disinvestment (9) 0.3 0.1 0.7 0.4 0.3 -35% -59% 195.6% -25.0%
Telecom-related receipts
0.5 0.7 0.53 0.5 0.4 -35% 58% -36.2% -15.0%
(10)
Other receipts (11) 1.9 3.0 2.3 2.0 2.4 -32% 61% -34.6% 21.5%
Fiscal Deficit (as a % of
9.2% 6.7% 6.4% 6.8% 5.9% 97% -27% 2.0% -13.4%
GDP)
Fiscal Deficit (E = A - D) 18 16 16.6 18.6 18 95% -13% 17.3% -3.9%
Nominal GDP 198.0 236.4 257.9 273.1s 301.8 -1% 19% 15.0% 11.0%
Source: Union Budget Documents, CGA, Ambit Capital research. Note- 1) Nominal GDP assumption for FY23 is 11%. 2) (Ambit) refers to Ambit’s forecast for FY22
and FY23.

WPI likely to be lower in FY24 resulting in lower GDP deflator

Nominal GDP growth in FY24 is expected to slow down to 11% YoY (from 15.5% YoY
in FY23). We believe the real GDP would be 5.5% YoY as we assume a GDP deflator
of 5.5%. This is because a fall in commodity prices is likely to lower WPI inflation,
resulting in lower deflator (see exhibit below).

darshan@tcgamc.com

January 10, 2023 Ambit Capital Pvt. Ltd. Page 7

 Economy

Exhibit 18: Nominal GDP growth is expected to normalize Exhibit 19: WPI is linked to commodity prices globally
to 11% YoY in FY23

20%
19.9%

19.5%
R² = 0.446
Nominal GDP growth

WPI inflation (YoY, %)

15.5%

15%
14.4%
13.8%

15%
13.0%

11.8%
11.0%
11.0%

10.6%
10%
10.5%
(YoY, %)

11%
5%

6.2%
0%
-5%
-10%
FY21-1.4%

0%
-60%

-40%

-20%

20%

40%

60%
FY23E
FY24E
FY10
FY11
FY12
FY13
FY14
FY15
FY16
FY17
FY18
FY19
FY20

FY22
Bloomberg Commodity Index inflation
(YoY, %)
Source: CEIC, Ambit Capital research Source: CEIC, Ambit Capital research.

Welfare spending to normalize in FY24

Extraordinary circumstances in the last three years pushed the government’s welfare
spending to record levels. We expect welfare spending to fall in FY24 as outgo on
major subsidies decline. Total welfare spending is likely to contract by 35% YoY in
FY24 (see exhibits below).

Exhibit 20: Welfare spending to finally normalize in FY24 Exhibit 21: Welfare spending would fall by 35% in FY24
FY23 FY24
FY23 FY24
4.4%

In Rs trn FY22 Growth growth

(Ambit) (Ambit)
over FY22 over FY22
Welfare spending

Petroleum
2.9%

2.9%
2.8%
2.8%
(% of GDP)

0.0 0.3 0.2 713% -28%

2.7%
2.6%

2.6%
2.5%

Subsidy
2.2%
2.0%

1.8%
1.7%

1.7%
1.7%

1.6%
1.6%

1.5%

Food Subsidy 2.9 3.3 2.1 14% -36%

1.5%

1.4%
1.4%
1.4%
1.3%

1.2%
1.2%

Fertilizer
1.4 3 1.0 78% -60%
subsidies

PM KISAN 0.7 0.7 0.8 1% 10%

FY01
FY03
FY05
FY07
FY09
FY11
FY13
FY15
FY17
FY19
FY21
FY23BE
FY24 (Ambit)

MGNREGA 1.1 1 1 -6% 0%

Total Welfare
6.1 7.8 5.1 28% -35%
Spending
Source: CEIC, Ambit Capital research. Note- Welfare spending involves Source: CEIC, Ambit Capital research. Note- Welfare spending involves
Subsidies, MGNREGA spending and PM KISAN Subsidies, MGNREGA spending and PM KISAN

Fall in international price of fertilizers and discontinuation of Pradhan Mantri Gareeb

Kalyan Ann Yojana (PMGKAY) will result in lower outgo on food and fertilizer subsidy
in FY24 (see exhibit below).

darshan@tcgamc.com

January 10, 2023 Ambit Capital Pvt. Ltd. Page 8

 Economy

Exhibit 22: Fertilizer prices have cooled down globally… Exhibit 23: …and the government has decided to
discontinue PMGKAY scheme from 4QFY23

DAP TSP Urea 1.5

Free food-grain distribution

1200 1.3
Commodity Price ($/mt)

1000 1.1

scheme allocation
(PMGKAY, Rs trn)
800
600
400
200
0
May-15
Dec-15
Jul-16
Feb-17

Nov-18
Jun-19
Jan-20

Oct-21
May-22
Dec-22
Aug-20
Sep-17
Apr-18

Mar-21

FY21 FY22 FY23YTD

Source: World Bank, Ambit Capital research Source: Media Articles, Ambit Capital research. Note- PMGKAY – Pradhan
Mantri Garib Kalyan Anna Yojana

Even as welfare spending normalizes, it is worth noting that at 1.7% of GDP, it will
still be higher than pre-pandemic average of 1.5% (average over FY17-20) as need
to support rural economy will be high in a pre-election year (see exhibits below).

Exhibit 24: Elevated job demand for MGNREGA scheme Exhibit 25: Low nominal wage growth coupled with high
represents stress in the non-farm labour market rural inflation reduced the purchasing power of the rural
population

FY23 FY15-20 average Agricultural Inflation Real Wage growth

Nominal Wage growth
50
MGNREGA job demand

9%
Rural Wage growth growth

40
7%
30 5%
(in mn)

20 3%
1%
(%)

10
-1%

Oct-22 -0.3%
0 -3%
July
May

August

September

November

December
April

June

October

-5%
Oct-19
Jan-20

Jul-20
Oct-20
Jan-21

Jul-21
Oct-21
Jan-22

Jul-22
Apr-20

Apr-21

Apr-22

Source: MGNREGA, Ambit Capital research. Note- 1) MGNREGA- Source: CEIC, RBI, Ambit Capital research. Note- Real wage is derived by
Mahatma Gandhi National Rural Employment Guarantee Scheme normalizing nominal wages using agricultural inflation

Capex: Will off-budget capex drag government investments?

The government’s on-budget capex has been growing at a brisk pace in the last three
years (CAGR 27%). As a % of GDP, on-budget capex increased to 3% in FY23 (from
1.7% in FY20). We expect the government to maintain this pace in FY24 too (see
exhibit below).

darshan@tcgamc.com

January 10, 2023 Ambit Capital Pvt. Ltd. Page 9

 Economy

Exhibit 26: On-budget capex would remain high

3.9%
3.6%
Capex (% of GDP)

3.0%

3.0%
2.9%
2.8%
2.6%

2.5%
2.4%
2.2%

2.1%
2.1%

1.9%
1.8%
1.8%

1.8%
1.8%

1.7%

1.7%
1.7%
1.6%

1.6%
1.6%

1.6%

1.5%

FY23(Ambit)
FY01
FY02
FY03
FY04
FY05
FY06
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
FY16
FY17
FY18
FY19
FY20
FY21
FY22
FY23BE

FY24 (Ambit)
Source: CEIC, Union Budget Documents, Ambit Capital research

However, the government’s off-budget capex or Internal and Extra Budgetary

resources (IBER) have been declining, dragging overall capex growth (see exhibits
below).

Exhibit 27: While on-budget capex has Exhibit 28: …the government’s Exhibit 29: … thus dragging overall
been growing impressively… off-budget capex has been Central capex lower
contracting…
25.9%
30.8%

38.4%

26.9%
25.0%
23.7%

government Capex
growth (3yr CAGR)
growth (3yr CAGR)

17.3%
On Budget Capex

growth (3yr CAGR)

Off Budget Capex

16.0%

16.0%
17.0%
17.4%

Total Central
15.1%
14.9%

11.5%
8.8%
4.8%
10.1%

7.7%
6.7%
7.4%

6.0%
6.1%
5.3%

1.2%
FY23 -9.9%
FY22 -6.2%
FY21 -7.7%
FY15
FY16
FY17
FY18
FY19
FY20
FY21
FY22
FY23

FY15
FY16
FY17
FY18
FY19
FY20

FY15
FY16
FY17
FY18
FY19
FY20
FY21
FY22
FY23
Source: CGA, Union Budget Documents, Ambit Source: CGA, Union Budget Documents, Ambit Source: CGA, Union Budget Documents, Ambit
Capital research Capital research Capital research

The top three sectors in terms of allocation of on-budget capex in the last three years
are roads, defence and railways. We expect these three sectors to be drivers of capex
in FY24 too.
Exhibit 30: Four sectors have been driving the centre's capex since FY21

Sector-wise share of capex (%)

Housing, 3%
Rail-ways, 23%
Others, 26%

Roads, 24%
Defence, 24%

Source: Union Budget Documents, Ambit Capital research. Note- 1) Data up to Nov'22. 2) The chart represents
share of aggregate capex from April’20 to Nov’22 (FY21-FY23YTD).

darshan@tcgamc.com

January 10, 2023 Ambit Capital Pvt. Ltd. Page 10

 Economy

Tax revenue too should normalize

As nominal GDP growth is expected to moderate from 15% YoY in FY23 to 11% in
FY24, we expect normalization in gross tax revenue growth which is expected to grow
at 10.5% in FY24 (from 11.7% YoY growth in FY23; see exhibits below).

Exhibit 31: Gross tax collection growth Exhibit 32: …as aggregate direct tax Exhibit 33: …less than 10% YoY in
to moderate to 10% YoY… collections growth would be... FY24YTD

43.1%
33.6%

55.6%

Income tax collection

collection growth (YoY,
Gross tax collection
growth (YoY, %)

growth (YoY, %)
17.8%
16.2%

15.2%
17.9%
16.9%

21.5%
Corporate tax

19.9%

19.2%
9.0%
12.0%
11.8%

7.0%
5.7%
10.0%

13.1%

10.0%
8.4%

8.5%

4.0%
%)
0.8%

-2.0%
FY21 -17.8%
FY20 -16.1%
FY20 -3.4%

FY16
FY17
FY18
FY19

FY22
FY23E
FY24E

FY16
FY17
FY18
FY19
FY20
FY21
FY22
FY23E
FY24E
FY16
FY17
FY18
FY19

FY21
FY22
FY23E
FY24E

Source: CEIC, Union Budget Documents, Ambit Source: CEIC, Union Budget Documents, Ambit Source: CEIC, Union Budget Documents, Ambit
Capital research Capital research Capital research

Exhibit 34: While union excise duty Exhibit 35: …customs and GST Exhibit 36: …will moderate in FY24 on
growth will benefit from low base… collections… account of a higher base
62.7%

47.8%

31.5%

27.2%
GST collection growth
Custom duty collection
Union Excise collection

51.2%

23.3%

21.1%
15.5%
32.5%

11.9%
growth (YoY, %)
growth (YoY, %)

10.9%
21.2%

7.1%

6.9%

(YoY, %)

3.0%
3.7%

0.3%
-32.0%

-10.7%

FY20 -7.2%
FY19 -8.7%
-42.7%

FY21 -8.3%
-28.2%
FY16
FY17
FY18
FY19
FY20
FY21
FY22

FY16
FY17
FY18

FY21
FY22

FY19

FY20

FY22
FY23E
FY24E

FY23E
FY24E

FY23E

FY24E
Source: CEIC, Union Budget Documents, Ambit Source: CEIC, Union Budget Documents, Ambit Source: CEIC, Union Budget Documents, Ambit
Capital research Capital research Capital research

Direct tax (corporate and personal income tax) growth will see moderation as high
base effect and slowdown in nominal GDP growth pull down tax collections.
Moreover, formal hiring is also showing signs of moderation, which will adversely
affect personal income tax growth (see exhibits below).

Exhibit 37: While formal sector hiring is losing its steam… Exhibit 38: …business sentiments suggest FY24 could see
moderation in demand

Business Assessment Index

1.4
Business Expectations Index
EPFO new subscribers

1.2 150
Business Sentiment Index

1.0 130
(in mn)

0.8
110
(base=100)

0.6
90
0.4
70
0.2
0.0 50
Dec-10
Dec-11
Dec-12
Dec-13
Dec-14
Dec-15
Dec-16
Dec-17
Dec-18
Dec-19
Dec-20
Dec-21
Dec-22
Dec-19

Dec-20

Dec-21
Apr-19
Aug-19

Apr-20
Aug-20

Apr-21
Aug-21

Apr-22
Aug-22

Source: EPFO, Ambit Capital research Source: RBI, Ambit Capital research. Note- Figure above 100 represents
expansion

As commodity prices moderate, it will also reduce the value of imports, adversely
affecting customs duty collections and GST (through IGST route).
darshan@tcgamc.com

January 10, 2023 Ambit Capital Pvt. Ltd. Page 11

 Economy

Exhibit 39: Imports have been moderating in recent Exhibit 40: Tax collected through imports form the largest
months component of GST

50% Contribution by GST components (%)

Imports growth (YoY, %)

40% CGST,
IGST on
30% Imports, 17.8%
20% 26.6%
10%
0%
-10%
-20% SGST,
22.5%
-30%
Nov-12

Nov-14

Nov-16

Nov-18

Nov-20

Nov-22
IGST -Ex
Imports, CESS, 6.9%
26.2%
Source: CEIC, Ambit Capital research Source: GST Council, Ambit Capital research

Taking all these into consideration, we expect the government to target a fiscal deficit
of 5.9% of GDP in FY24 (see exhibit below).
Exhibit 41: Fiscal deficit is likely to be 5.9% of GDP in FY24 9.2%
Fiscal Deficit (% of GDP)

6.8%
6.7%
6.6%
6.1%
6.1%

5.9%

5.9%
5.8%
5.6%

5.4%
4.9%
4.9%

4.7%

4.5%
4.5%
4.4%

4.1%
4.0%
3.9%

3.9%
3.5%
3.5%
3.4%
3.4%
2.6%

FY23E
FY24E
FY25E
FY26E
FY01
FY02
FY03
FY04
FY05
FY06
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
FY16
FY17
FY18
FY19
FY20
FY21
FY22

Source: CEIC, Union Budget Documents, Ambit Capital research

darshan@tcgamc.com

January 10, 2023 Ambit Capital Pvt. Ltd. Page 12

 Economy

Major announcements expected

In recent months, there have been a lot of buzz related to the much required
changes in India’s Capital Gains Tax structure. The current system has been
deemed too complex by experts and we believe the government is looking
into rate rationalization. Moreover, in order to increase the disposable
income of the middle class, the government may increase the tax exemption
limit from Rs250,000 to Rs500,000 annually. Other than changes in tax
structure, the government would also be looking at pushing schemes that are
directly aimed at: a) public welfare like Urban Housing scheme (PMAY),
higher LPG subsidies and installation of taps in every household and b)
schemes that would benefit industries – introducing PLI for new sectors and
continuing with electricity reforms.
Rationalization of Capital Gains Taxes in India
For years, India’s tax structure for capital gains has been criticized on account of it
being too complicated. Officials from the finance ministry also seem to concur with
this opinion as they are looking to simplify the tax structure. But they have not
mentioned a time period to roll out a potential new tax structure. The reason for the
complexity has to do with the: a) non-uniformity in defining the time period on what
constitutes as ‘long term’ and b) different tax slabs for different categories of assets
(see exhibit below).
Exhibit 42: India’s capital gains tax regime lacks uniformity
Type of Capital Time Applicable
Asset Class
Gain Tax Period Tax
Short Term <12 Months 15%
Domestic Listed Equity Shares
Long Term >12 Months 10%
As per the income
Short Term Upto 24 Months
Domestic Un- Listed Equity Shares slab of the investor
Long Term >24 Months 20%
As per the income
Short Term Upto 24 Months
Foreign Shares slab of the investor
Long Term >24 Months 20%
Short Term <12 Months 15%
Equity Mutual Funds
Long Term >12 Months 10%
As per the income
Short Term Upto 36 Months
Debt Mutual Fund slab of the investor
Long Term >36 Months 20%
As per the income
Short Term Upto 36 Months
Gold Investments slab of the investor
Long Term >36 Months 20%
As per the income
Short Term Upto 24 Months
Real Estate slab of the investor
Long Term >24 Months 20%
Short Term Upto 36 Months 15%
REITS
Long Term >36 Months 10%
Source: Media Articles, Ambit Capital research. Note- The above is just the broad tax structure, every component
may have exception e.g. Sovereign Gold Bond, which is under Gold investment category does not attract Capital
gain taxes if held till maturity
To give a perspective, USA only considers up to 12 month as short term unlike India
where debt funds held up to 36 months are also short term, while domestic listed
equities held up to 12 months also come under short-term assets. Like India, the tax
incidence differs but it does not depend on the class of asset, rather it is based on the
income of an individual/household. Having a simplified tax structure would benefit
India in two ways:
 It will attract more Indians towards investing in Financial Assets
In recent years, equities and mutual funds have become attractive instruments for
many Indians who wish to park their savings. One of the major reasons is the higher
returns it generally provides over fixed income instruments such as bank deposits and
post office saving instruments. Growth in flow of savings to mutual funds and equities
was ~14% CAGR between FY10 and FY22 (see exhibits below).
darshan@tcgamc.com

January 10, 2023 Ambit Capital Pvt. Ltd. Page 13

 Economy

Exhibit 43: Capital market instruments Exhibit 44: …have seen considerable Exhibit 45: …among households in
such as equities … interest… recent years

Share of instrument in flow of

18.9%

13.7%

13.3% 100

8.9%
financial savings in FY22 (%)

8.2%
90

Demat Accounts
between FY10-FY22
household savings
CAGR growth in

4.5%

4.4%
Small
Mutual Total 55

(in mn)
Savings ,
fund & Deposit,
13% 36 41
Equity, 27% 25 28 32
8.2%
Mutual Funds

Financial

Bank Deposits
Small Savings

pension funds

Life Insurance
Currency
Provident and

Life
Assets
& Equity

Insuranc
Funds
Currency

FY16

FY17

FY18

FY19

FY20

FY21

FY22

FY23YTD
, 11% e Funds,
17%
PPF,
[VALUE]

Source: RBI, Ambit Capital research Source: RBI, Ambit Capital research. Note- PPF: Source: Media Articles, Ambit Capital research
Provident & Pension Fund

 It will augment the government’s tax revenues

With more Indians moving away from traditional instruments such as housing, gold
and bank deposits, capital gains potentially could become a major source of revenue
for the government. The government potentially earned ~Rs800bn in capital gains
revenues in FY22 according to the finance minister’s revised estimates in Feb’22.
Personal income tax – Exemption slab to widen
Currently, Indians earning up to Rs250,000 annually are exempted from paying taxes
on their income. According to several media sources, the government might be
considering increasing this slab from Rs250,000 per annum to Rs500,000. It is to be
noted that individuals who have income between the above range even under the
current regime practically pay no taxes as through Section 87A, they are able to
receive a complete rebate.

So how does this move help?

By raising the limit, people who earn above Rs500,000 annually too will pay lower
taxes as they would be taxed on income over and above the exemption slab, i.e. they
would be taxed on income above Rs500,00 unlike the current regime where they are
taxed for income above Rs250,000. This will boost spending for many Indians as their
disposable income would increase (see exhibit below).
Exhibit 46: 64.2% of tax payers are either exempted of or receive a full rebate of taxes

Share of tax payers based on their gross annual salary (%)

>Rs1bn, 0.003% Rs10mn-Rs1bn,

0.3%
Rs1mn-Rs10mn,
9.8%

Rs500,000-
0-500,000,
Rs1mn, 25.6%
64.2%

Source: Income Tax department, Ambit Capital research. Note- Data is from FY19

Apart from these two measures, we believe there are central government schemes
and announcements that one should look for:

darshan@tcgamc.com

January 10, 2023 Ambit Capital Pvt. Ltd. Page 14


Exhibit 47: With elections in mind, government focus is on several welfare schemes
Scheme/ Measures
Increased Outlay for Revamped
Distribution Sector Scheme (RDSS)
Money Control, 4-Jan’23
https://bit.ly/3GoEAqs
PLI Scheme
Financial Express, 3-Nov’22,
https://bit.ly/3jZY7pW
Pradhan Mantri Awas Yojana
(Urban)
Mint, 20-Nov’22
https://bit.ly/3jQlPVn
Ujjwala LPG subsidy
Mint, 25-Dec’22
https://bit.ly/3ic6iyU
Jal Jeevan Mission
PIB, 27-Dec’22
https://bit.ly/3WS5myr
Source: Media Articles, Ambit Capital research
darshan@tcgamc.com
January 10, 2023
Economy
Description
The aim of the scheme is to increase the coverage of houses with pre-
paid smart meters and reduce the financial losses faced by the power
companies. Till government has sanctioned Rs1.2trn for distribution of
173mn smart meters. Government is expected to double its allocation
of the scheme in FY24. According to officials, the focus in the next
few years would be to bring down the AT&C losses to single digits.
Since CY20, government has rolled down PLI schemes for 14 sectors.
The outlay for the 14 sectors would be Rs1.97trn over the period of
next 5 years. News outlets have reported that government is
considering rolling out PLI scheme for 8 more sectors. This would
include - textiles, electronic components, furniture, toys and leather.
Government would be incurring expenses over & above the
previously ear-marked figure of Rs1.97trn.
For FY23, government had set aside Rs480bn for the PMAY Yojana as
it aimed to build 8mn houses. With 4 months to go, government has
already exhausted the schemes’ budget. Given the success of the
scheme, government officials believe the allocation for the scheme
could be significant in FY24. Government has set a target of 12.2mn
houses by December 2024, of which 6.5mn has been achieved.
Government has set an aim of 100% LPG coverage in India. In
May’21, in order to tackle the high gas prices, government decided to
provide Rs200 per cylinder up to 12 cylinders in a FY. 90mn people
would be beneficiary of this scheme as government set aside Rs65bn
in FY22. According to government sources, the free distribution could
extend by another year. This should help the rural population who
are facing high inflation.
Launched in CY19 when only 17% households had access to tap
water, Jal Jeevan Mission is a scheme with an aim to ensure 100% of
the households have access to tap water by CY24. With 55%
households now having access, government would be pushing to
increase this proportion as CY24 and election year is around the
corner. In FY23YTD, Rs230bn has been incurred.
Ambit Capital Pvt. Ltd. Page 15
 Economy

Institutional Equities Team

Research Analysts
Name Industry Sectors Desk-Phone E-mail
Nitin Bhasin - Head of Research Strategy / Accounting / Home Building / Consumer Durables (022) 66233241 nitin.bhasin@ambit.co
Alok Shah, CFA Consumer Staples / Consumer Discretionary (022) 66233259 alok.shah@ambit.co
Amandeep Singh Grover Mid/Small-Caps / Hotels / Real Estate / Aviation (022) 66233082 amandeep.grover@ambit.co
Amar Kedia Capital Goods / Infrastructure (022) 66233212 amar.kedia@ambit.co
Ashwin Mehta, CFA Technology (022) 66233295 ashwin.mehta@ambit.co
Bharat Arora, CFA Strategy (022) 66233278 bharat.arora@ambit.co
Dhruv Jain Mid-Caps / Home Building / Consumer Durables (022) 66233177 dhruv.jain@ambit.co
Eashaan Nair Economy / Strategy (022) 66233033 eashaan.nair@ambit.co
Gaurav Jhunjhunuwala Media / Telecom / Oil & Gas (022) 66233227 gaurav.jhunjhunuwala@ambit.co
Jaiveer Shekhawat Mid/Small-Caps (022) 66233021 jaiveer.shekhawat@ambit.co
Jashandeep Chadha, CFA Metals & Mining / Cement (022) 66233246 jashandeep.chadha@ambit.co
Karan Khanna, CFA Mid/Small-Caps / Hotels / Real Estate / Aviation (022) 66233251 karan.khanna@ambit.co
Karan Kokane, CFA Automobiles / Auto Ancillaries (022) 66233028 karan.kokane@ambit.co
Kumar Saumya Chemicals (022) 66233242 kumar.saumya@ambit.co
Namant Satiya, CFA Consumer Staples (022) 66233259 namant.satiya@ambit.co
Omnath Sinh Capital Goods / Infrastructure (022) 66233212 omnath.sinh@ambit.co
Pankaj Agarwal, CFA Banking / Financial Services (022) 66233206 pankaj.agarwal@ambit.co
Parth Dalia Healthcare (022) 66233041 parth.dalia@ambit.co
Parth Gupta Hotels / Real Estate (022) 66233251 parth.gupta@ambit.co
Parth Majithia Strategy / Forensic Accounting (022) 66233149 parth.majithia@ambit.co
Prabal Gandhi Banking / Financial Services (022) 66233206 prabal.gandhi@ambit.co
Pratik Matkar Banking / Financial Services (022) 66233252 pratik.matkar@ambit.co
Prashant Nair, CFA Healthcare (022) 66233041 prashant.nair@ambit.co
Raghav Garg Banking / Financial Services (022) 66233206 raghav.garg@ambit.co
Satyadeep Jain, CFA Metals & Mining / Cement (022) 66233246 satyadeep.jain@ambit.co
Saurabh Jain Automobiles / Auto Ancillaries (022) 66233142 saurabh.jain@ambit.co
Sumit Shekhar Economy / Strategy (022) 66233229 sumit.shekhar@ambit.co
Supratim Datta Banking / Financial Services (022) 66233252 supratim.datta@ambit.co
Videesha Sheth Consumer Discretionary (022) 66233264 videesha.sheth@ambit.co
Vinit Powle Strategy / Forensic Accounting (022) 66233149 vinit.powle@ambit.co
Viraj Dhandhukiya Strategy (022) 66233278 viraj.dhandhukiya@ambit.co
Vivekanand Subbaraman, CFA Media / Telecom / Oil & Gas (022) 66233261 vivekanand.s@ambit.co
Yash Joglekar Technology (022) 66233027 yash.joglekar@ambit.co
Sales
Name Regions Desk-Phone E-mail
Dhiraj Agarwal - MD & Head of Sales India (022) 66233253 dhiraj.agarwal@ambit.co
Bhavin Shah India (022) 66233186 bhavin.shah@ambit.co
Dharmen Shah India / Asia (022) 66233289 dharmen.shah@ambit.co
Abhishek Raichura UK & Europe (022) 66233287 abhishek.raichura@ambit.co
Pranav Verma Asia (022) 66233214 pranav.verma@ambit.co
Shiva Kartik India (022) 66233299 shiva.kartik@ambit.co
Soumya Agarwal India (022) 66233062 soumya.agarwal@ambit.co
USA / Canada
Sean Rodrigues Americas (022) 66233211 sean.rodrigues@ambit.co
Singapore
Sundeep Parate Singapore +65 6536 1918 sundeep.parate@ambit.co
Pooja Narayanan Singapore +65 6536 1918 pooja.narayanan@ambit.co
Production
Sajid Merchant Production (022) 66233247 sajid.merchant@ambit.co
Sharoz G Hussain Production (022) 66233183 sharoz.hussain@ambit.co
Jestin George Editor (022) 66233272 jestin.george@ambit.co
Richard Mugutmal Editor (022) 66233273 richard.mugutmal@ambit.co
Nikhil Pillai Database (022) 66233265 nikhil.pillai@ambit.co
Amit Tembhurnikar Database (022) 66233265 amit.tembhurnikar@ambit.co

darshan@tcgamc.com

January 10, 2023 Ambit Capital Pvt. Ltd. Page 16

 Economy

Explanation of Investment Rating - Our target prices are with a 12-month perspective. Returns stated are our internal benchmark
Investment Rating Expected return (over 12-month)
BUY We expect this stock to deliver more than 10% returns over the next12 month
SELL We expect this stock to deliver less than or equal to 10 % returns over the next 12 months
UNDER REVIEW We have coverage on the stock but we have suspended our estimates, TP and recommendation for the time being NOT
NOT RATED We do not have any forward-looking estimates, valuation, or recommendation for the stock.
POSITIVE We have a positive view on the sector and most of stocks under our coverage in the sector are BUYs
NEGATIVE We have a negative view on the sector and most of stocks under our coverage in the sector are SELLs
NO STANCE We have forward looking estimates for the stock but we refrain from assigning valuation and recommendation

Note: At certain times the Rating may not be in sync with the description above as the stock prices can be volatile and analysts can take time to react to development.

Disclaimer
This report or any portion hereof may not be reprinted, sold or redistributed without the written consent of Ambit Capital Private Ltd. Ambit Capital Private Ltd. research is disseminated and available
primarily electronically, and, in some cases, in printed form. The following Disclosures are being made in compliance with the SEBI (Research Analysts) Regulations, 2014 (herein after referred to as the
Regulations).

Disclosures
 Ambit Capital Private Limited (“Ambit Capital or Ambit”) is a SEBI Registered Research Analyst having registration number INH000000313. Ambit Capital, the Research Entity (RE) as defined in the
Regulations, is also engaged in the business of providing Stock broking Services, Portfolio Management Services, Depository Participant Services, distribution of Mutual Funds and various financial
products. Ambit Capital is a subsidiary company of Ambit Private Limited. The details of associate entities of Ambit Capital are available on its website.
 Ambit Capital makes its best endeavor to ensure that the research analyst(s) use current, reliable, comprehensive information and obtain such information from sources which the analyst(s) believes
to be reliable. However, such information has not been independently verified by Ambit Capital and/or the analyst(s) and no representation or warranty, express or implied, is made as to the
accuracy or completeness of any information obtained from third parties. The information, opinions, views expressed in this Research Report are those of the research analyst as at the date of this
Research Report which are subject to change and do not represent to be an authority on the subject. Ambit Capital and its affiliates/ group entities may or may not subscribe to any and/ or all the
views expressed herein and the statements made herein by the research analyst may differ from or be contrary to views held by other businesses within the Ambit group.
 This Research Report should be read and relied upon at the sole discretion and risk of the recipient. If you are dissatisfied with the contents of this Research Report or with the terms of this
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conditions in place between Ambit Capital/ such affiliates and the client.
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 Apart from the case of Manappuram Finance Ltd. where Ambit Capital settled the matter with SEBI without accepting or denying any guilt, there is no material disciplinary action that has been
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Disclosure of financial interest and material conflicts of interest

 Ambit Capital, its associates/group company, Research Analyst(s) or their relative may have any financial interest in the subject company. Ambit Capital and/or its associates/group companies may
have actual/beneficial ownership of 1% or more interest in the subject company at the end of the month immediately preceding the date of publication of the Research Report. Ambit Capital and its
associate company (ies), may; (a) from time to time, have a long or short position in, act as principal in, and buy or sell the securities or derivatives thereof of companies mentioned herein. (b) be
engaged in any other transaction involving such securities and earn brokerage or other compensation or act as a market maker in the financial instruments of the company (ies) discussed herein or
act as 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 Ambit Capital even though there might exist an apparent conflict in some of the stocks mentioned in the research report. Ambit Capital and/or its associates/group
company may have received any compensation from the subject company in the past 12 months and/or Subject Company is or was a client during twelve months preceding the date of distribution
of the research report.
 In the last 12 months period ending on the last day of the month immediately preceding the date of publication of this research report, Ambit Capital or any of its associates/group company or
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 managed or co-managed public offering of securities for the subject company of this research report,
 received compensation for investment banking or merchant banking or brokerage services from the subject company,
 received compensation for products or services other than investment banking or merchant banking or brokerage services from the subject company of this research report.
 received any compensation or other benefits from the subject company or third party in connection with the research report.
 Ambit Capital and / or its associates/group company do and seek to do business including investment banking with companies covered in its research reports. Compensation of Research Analysts is
not based on any specific merchant banking, investment banking or brokerage service transactions.

Additional Disclaimer for Canadian Persons

About Ambit Capital:
 Ambit Capital is not registered in the Province of Ontario and /or Province of Québec to trade in securities and/or to provide advice with respect to securities.
 Ambit Capital's head office or principal place of business is located in India.
 All or substantially all of Ambit Capital's assets may be situated outside of Canada.
 It may be difficult for enforcing legal rights against Ambit Capital because of the above.
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 Name and address of Ambit Capital's agent for service of process in the Province of Québec is Torys Law Firm LLP, 1 Place Ville Marie, Suite 1919 Montréal, Québec H3B 2C3 Canada.
About Ambit America Inc.:
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 Ambit America Inc. is resident and registered in the United States.
 The name and address of the Agent for service in Quebec is: Lavery, de Billy, L.L.P., Bureau 4000, One Place Ville Marie, Montreal, Quebec, Canada H3B 4M4.
 The name and address of the Agent for service in Toronto is: Sutton Boyce Gilkes Regulatory Consulting Group Inc., 120 Adelaide Street West, Suite 2500, Toronto, ON Canada M5H 1T1.
 A client may have difficulty enforcing legal rights against Ambit America Inc. because it is resident outside of Canada and all substantially all of its assets may be situated outside of Canada.

Additional Disclaimer for Singapore Persons

 Ambit Singapore Pte. Limited is a holder of Capital Market services license and an exempt financial adviser in Singapore, as per the approved agreement under Paragraph 9 of Third Schedule of
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 Persons in Singapore should contact either Ambit Capital or Ambit Singapore Pte. Limited in respect of any matter arising from, or in connection with this report/publication/communication. This
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 Economy

Additional Disclaimer for UK Persons

 All of the recommendations and views about the securities and companies in this report accurately reflect the personal views of the research analyst named on the cover. No part of this research
analyst’s compensation was, is, or will be directly or indirectly related to the specific recommendations or views expressed by the research analyst in this research report. This report may not be
reproduced, redistributed or copied in whole or in part for any purpose.
 This report is a marketing communication and has been prepared by Ambit Capital Private Ltd. of Mumbai, India (“Ambit Capital”). Ambit is regulated by the Securities and Exchange Board of India
and is registered as a Research Entity under the SEBI (Research Analysts) Regulations, 2014. Ambit is an appointed representative of Aldgate Advisors Limited which is authorized and regulated by
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 In the UK, this report is directed at and is for distribution only to persons who (i) fall within Article 19(5) (persons who have professional experience in matters relating to investments) or Article
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 Ambit may sell or buy any securities or make any investment which may be contrary to or inconsistent with this Report and are not subject to any prohibition on dealing. By accepting this report you
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However, clients/potential clients of Ambit should be aware of these possible conflicts of interests and should make informed decisions in relation to Ambit services.

Additional Disclaimer for U.S. Persons

THIS RESEARCH REPORT IS BEING DISTRIBUTED IN THE US TO MAJOR INSTITUTIONAL INVESTORS UNDER RLE 15a-6 AND UNDER A GLOBAL BRAND OF AMBIT AMERICA AND AMBIT
CAPITAL PRIVATE LTD.
 The Ambit Capital research report is solely a product of Ambit Capital Private Ltd. and may be used for general information only. The legal entity preparing this research report is not registered as a
broker-dealer in the United States and, therefore, is not subject to U.S. rules regarding the preparation of research reports and/or the independence of research analysts.
 Ambit Capital is the employer of the research analyst(s) who has prepared the research report.
 Any subsequent transactions in securities discussed in the research reports should be effected through Ambit America Inc. (“Ambit America”).
 Ambit America Inc. does not accept or receive any compensation of any kind directly from US Institutional Investors for the dissemination of the Ambit Capital research reports. However, Ambit
Capital Private Ltd. has entered into an agreement with Ambit America Inc. which includes payment for sourcing new MUSSI and service existing clients based out of USA.
 Analyst(s) preparing this report are resident outside the United States and are not associated persons or employees of any US regulated broker-dealer. Therefore the analyst(s) may not be subject to
Rule 2711 restrictions on communications with a subject company, public appearances and trading securities held by the research analyst.
 In the United States, this research report is available for distribution to major U.S. institutional investors, as defined in Rule 15a – 6 under the Securities Exchange Act of 1934. Additionally, this
research report is available to a limited number of individuals as Globally Branded research, as defined in FINRA Rule 2241. This research report is distributed in the United States by Ambit America
Inc., a U.S. registered broker and dealer and a member of FINRA. Ambit America Inc., a US registered broker-dealer, accepts responsibility for this research report and its dissemination in the
United States.
 This Ambit Capital research report is not intended for any other persons in the USA. All major U.S. institutional investors or persons outside the United States, having received this Ambit Capital
research report shall neither distribute the original nor a copy to any other person in the United States. In order to receive any additional information about or to effect a transaction in any security
or financial instrument mentioned herein, please contact a registered representative of Ambit America Inc., by phone at 646 793 6001 or by mail at 370, Lexington Avenue, Suite 803, New York,
10017. This material should not be construed as a solicitation or recommendation to use Ambit Capital to effect transactions in any security mentioned herein.
 This document does not constitute an offer of, or an invitation by or on behalf of Ambit Capital or its affiliates or any other company to any person, to buy or sell any security. The information
contained herein has been obtained from published information and other sources, which Ambit Capital or its Affiliates consider to be reliable. None of Ambit Capital accepts any liability or
responsibility whatsoever for the accuracy or completeness of any such information. All estimates, expressions of opinion and other subjective judgments contained herein are made as of the date
of this document. Emerging securities markets may be subject to risks significantly higher than more established markets. In particular, the political and economic environment, company practices
and market prices and volumes may be subject to significant variations. The ability to assess such risks may also be limited due to significantly lower information quantity and quality. By accepting
this document, you agree to be bound by all the foregoing provisions.
 Ambit America Inc. or its affiliates or the principals or employees of Ambit Group may have or have had positions, may “beneficially own” as determined in accordance with Section 13(d) of the
Exchange Act, 1% or more of the equity securities or may conduct or may have conducted market-making activities or otherwise act or have acted as principal in transactions in any of these
securities or instruments referred to herein.
 Ambit America Inc. or its affiliates or the principals or employees of Ambit Group may have managed or co-managed a public offering of securities or received compensation for investment banking
services or expects to receive or intends to seek compensation for investment banking or consulting services or serve or have served as a director or a supervisory board member of a company
referred to in this research report.
 As of the date of this research report Ambit America Inc. does not make a market in the security reflected in this research report.

Analyst(s) Certification
 The analyst(s) authoring this research report hereby certifies that the views expressed in this research report accurately reflect such research analyst's personal views about the subject securities and
issuers and that no part of his or her compensation was, is, or will be directly or indirectly related to the specific recommendations or views contained in the research report.
 The analyst (s) has/have not served as an officer, director or employee of the subject company in the last 12 months period ending on the last day of the month immediately preceding the date of
publication of this research report.
 The analyst(s) does not hold one percent or more securities of the subject company, at the end of the month immediately preceding the date of publication of the research report.
 Research Analyst views on Subject Company may vary based on fundamental research and technical research. Proprietary trading desk of Ambit Capital or its associates/group companies maintains
arm’s length distance with the research team as all the activities are segregated from Ambit Capital research activity and therefore it can have an independent views with regards to Subject
Company for which research team have expressed their views.

Registered Office Address: Ambit Capital Private Limited, 449, Ambit House, Senapati Bapat Marg, Lower Parel, Mumbai-400013
Compliance Officer Details: Sanjay Shah, Email id: compliance@ambit.co, Contact Number: 91 22 68601965
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374-2006; SEBI Portfolio Managers registration number INP000002221, AMFI registration number ARN 36358.

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