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MOSL: Morning India (16/February/18): 1. EcoScope; 2. Fund Folio; 3. Zee Entertainment; 4. Endurance Tech; 5. KNR Construction

MOrning India (16/February/18): 1. EcoScope; 2. Fund Folio; 3. Zee Entertainment; 4. Endurance Tech; 5. KNR Construction; 6. Repco Home Fin

 

Today’s top research theme

EcoScope - States’ spending muted but center supports in 3QFY18; Large shortfall in tax receipts on account of GST unlikely

• Aggregate spending of 20 states rose by just 1.8% YoY in 3QFY18, marking the slowest growth at least since FY11. Frugal spending is likely to have been caused by a weakness in tax receipts, which rose by a meager 2.4%. The aggregate fiscal deficit of the states touched 52.6% of Budget Estimates during April-December 2017, higher than the average of 43.5% in the last five years.
• Fiscal spending supported real GDP growth in 3QFY18, as total spending of the general government (center + 20 states) grew 11.8% YoY in 3QFY18 – up from 2.4% in 2Q. Within total spending, capital spending surged by 28.8% on account of prolific spending by the center, while core revenue spending growth remained weak at just 4.9%. Combined analysis of tax receipts also reveals that actual tax receipts in FY18 may just match BEs, implying that large shortfalls are unlikely on account of GST. Non-tax receipts — unrelated with GST — are more likely to throw a nasty surprise.

Piping hot news

India’s trade deficit in January rises to 56-month high of $16.3b

India’s trade deficit shot up to a 56-month high of $16.3 billion in January as imports of precious stones and crude oil surged during the month while growth in exports slowed down.