Economy - Motilal Oswal Financial Services

BSE Index Analysis, Securties , Standard Experts

RAAMDEO AGRAWAL, JMD, Motilal Oswal Financial Services 

RAAMDEO AGRAWAL, JMD, Motilal Oswal Financial Services  

Source: Economic Times

India's economy has to grow at 8% to 8.5% for companies' revenue growth to expand 18-20% 

On GDP growth: At 7% growth or below, the revenue growth is about 12-13%. So, if revenue growth has to increase to 18-20%, economic growth rates need to be bumped up to 8-8.5%.

What can go wrong for the economy from here? Majority of the problems in India are related to the government. What is happening is non-action, not even delay. It's not that the government does not act, but it acts under coercion. So, this mode of functioning of the government is the biggest problem right now.

On Dividends: Companies are taking the shelter under growth to skip dividends. Dividend payout of Indian companies is the second lowest in the world after Russia. Our wealth study shows only 133 companies have 20 years of uninterrupted dividend and only 106 raised dividend in at least five of the last 12 years. 

INDRANIL SENGUPTA, Chief Economist India at BoAML 

Source: www.moneycontrol.com 

INDRANIL SENGUPTA, Chief Economist India at BoAML  

See FY13 GDP growth at 6.8%

We are looking at a fiscal deficit of close to 6% next year. I don't think that these are times when you can cut the fiscal deficit.�

According to him, a Budget that balances both growth as well as fiscal discipline would qualify as a good Budget.

The recovery process for the economy will extend into the second half of the next year," he adds.

We are looking at an IIP of somewhere around 3%. We think that inflation comes down to close to 7%. Apart from these data points, what will also weigh on the RBI's mind is the December quarter growth numbers.

Our base case is that inflation comes down to around 6.5% levels by June. And then rebounds as you get oil price hikes, as you get power tariff increases and maybe some more coal price hike and then again comes down towards the end of the year. So, we see inflation going down now again rebounding in the middle of the year and then going off again.

We are looking at the rupee at Rs 49 per dollar in December. So, from hereon, the scope for much more appreciation is very limited because the RBI will have to buyback the Fx that they have sold.