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MOSL: Morning India (17/October/19): 1. Ecoscope (States’ finances remain constrained); 2. Federal Bank; 3. MindTree; 4. DB Corp; 5. Healthcare

MOrning India (17/October/19): 1. Ecoscope (States’ finances remain constrained); 2. Federal Bank; 3. MindTree; 4. DB Corp; 5. Healthcare

 Today’s top research idea

Ecoscope: States’ finances remain constrained; Despite better Aug’19, progress in FY20 disappointing

• Total receipts of 17 states grew only 4.1% YoY in 5MFY20, despite ~26% YoY growth in Aug'19. Over these five months, while capital expenditure rose only 0.6% YoY, core revenue spending (excl. interest payments) increased 7.6% YoY. Thus, total spending of states grew at a nine-year low of 5.8% over Apr-Aug'19. Combined fiscal deficit of states in the first five months, however, stood at 28.2% of BE, higher than 26.6% in the year-ago period.
• Overall, weak receipts have constrained states' capacity to meet their spending targets, with tight financial markets also restraining their ability to borrow excessively in FY18 and FY19. We expect a repetition of this story in FY20.

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