Key Monitorables - Rural recovery; Higher price realization Top Picks from the Sector: Dalmia Bharat Ltd, JK Cements Ltd, Birla Corporation Ltd

Retail sales for the automobile industry as a whole rose 10.1% YoY in May 2023 to 20.2 lakh units. Two-wheeler retails sales went up 9.3% YoY to 14.9 lakh units, while car retail sales rose 4.3% YoY to around 3 lakh units.

All segments of the industry observed year-on-year gains during this period.

Hospitals continue to maintain overall improvement in ARPOB and occupancy which had seen a surge post the outbreak of Covid-19. Most hospital chains are diligent in adding further beds to the network through M&A or brownfield capex. Non-covid revenues continue to witness steady 11-22% growth despite steep competitive pressure.

In the past five years, India’s chemical industry has come out of the shadows, with significant growth and an expanding number of listed companies. The global chemical market is in flux - while global consumption per capita has increased, China and Europe, the world’s largest chemical producers, have scaled back their production due to environmental concerns. This has created a favourable opportunity for India to ramp up production, and fill the supply gap.

In Q4FY23, companies under our coverage delivered 14%/26%/16% YoY increase in revenue/EBITDA/PAT, respectively. Growth was led by better traction across India and US which also supported 214bps improvement in gross margin.

The government has hiked the minimum support prices (MSP) of the key kharif crops for 2023-24 season (July-June) by 6-10.4%, the highest increase since 2018-19. The MSP for paddy, the key kharif crop, is fixed at Rs2,183/quintal, up 7% on year.

Non-life insurance companies reported a healthy growth of 18% YoY in May’23. ICICI Lombard (ICICIGI) reported 21% growth in GDPI in May’23 vs 17% in Apr’23 while Star Health’s GDPI growth was 16% in May'23 compared to 25% in Apr'23. On YTD basis, growth for ICICIGI/Star Health stood at 18%/20%, respectively.

Key Monitorables: Rural Recovery, Pick up in Exports, and Price Realizations Top Picks from the Sector: TVS motors in the 2W segment, Maruti in the PV segment, and Ashok Leyland in the CV segment, Mahindra CIE Automotive Ltd in the Ancillary space.

Q4FY23 was an uneasy quarter for most companies under our coverage with slip in margins and price hikes not being fully absorbed. Key highlights: 1) Volume grew for surface logistics companies, but slipped for rail companies; 2) trade imbalance coupled with lower EXIM volume QoQ resulted in lower margins for rail companies.

On expected lines, the RBI left policy rates unchanged at the second monetary policy meet for FY24.

Key Monitorables - Rural recovery; Margins Guidance; Inflation Trajectory Top Picks from the Sector: Varun Beverages; ITC; CCL Products

Key Monitorables - Direction of RM, Appointed date, Order Inflow, and Execution Top Picks from the Sector: PNC Infratech Ltd; H G Infra; KNR Constructions Ltd

Growth in payments remains strong. This is led by (1) expected total CC spends of Rs1.4trn in May’23 (up 4% MoM), (2) increase in receivable per credit card, (3) increase in cards in force (CIF) to 86.5mn, up 1.42% MoM in Apr’23, (4) MoM increase in Paytm GMV of 9% in May’23 and (5) increase in UPI transactions in terms of value/volume by 43/58% YoY to 9.5bn/Rs14.9trn in May’23, respectively.

The Reserve Bank of India is expected to pause for a second straight month as inflation eases and market watchers are looking for cues of a shift in policy stance to support growth in the economy.

From a peak of ~7.6% in Jun’22, the 10-year bond yield (RF - risk free rate) has dipped to sub 7% currently as the aggressive interest rate tightening cycle peaked. ERP (equity risk premium) indicators for India have also dipped significantly over the past one year in the form of: (a) Sharp decline in CDS of India 10-year bond from 230bps to ~150bps currently.

The monthly data on lending and deposit rates of scheduled commercial banks (SCBs) (excl. regional rural banks and small finance banks) for Apr’23 suggests: 1) SCBs’ outstanding weighted average lending rate (WALR) continues to rise (up 4bps MoM). 2) However, WALR on fresh loans has seen MoM decline (down 23bps) in Apr’23, after 11 months of consecutive rise.

The total value of credit card transactions rose 25.9% YoY but declined 3.3% MoM to Rs 1,33,125 crore. The number of cards outstanding increased by 15.1% YoY. Private sector banks grew by 32.9% YoY in terms of value of transactions.