Earnings Growth In India – Ambit Economy: M+R+T Resets

The election of Modi (M), the appointment of Rajan (R) and the advent of Technology (T) set off a collapse in earnings growth in India from FY14 (refer to our note titled ‘M+R+T = Earnings recession in India’ for details). Whilst the M+R+T resets have been disruptive in the short run, in this note we describe how the policy decisions triggered by M+R+T have propelled a silent revolution in ‘access’ to end-markets, capital and physical infrastructure. We expect the resultant reduction in cost of debt capital and slow but sure productivity boost to trigger a consumption-driven U-shaped economic recovery in India in FY18 (Ambit GDP est. for FY18 is 7.3% vs 6.8% in FY16). Hence, we urge investors to BUY...