Morgan Stanley

Latest AlphaWise Findings: India’s Urbanization Trend is Intact

Apr 26, 2012

Mumbai —

MUMBAI, April 26, 2012 – Morgan Stanley (NYSE: MS) today announced the findings of its latest AlphaWise work concluding that India continues to urbanize at a strong pace driven by a combination of uptrending consumption, robust job creation and growing financial penetration.

India’s urban population has grown by 2.8ppt annually over the last decade. Urbanization is driven by job offerings and infrastructure creation that lead to population growth. With this growth, it creates income, savings and consumption.

“The findings will form the basis for medium-long term sector trends,” says Ridham Desai, Head of India Research at Morgan Stanley. “These growth drivers will play a key role in forming investment views at the sector and stock levels.”

The research notes that at the aggregate level, the Morgan Stanley’s proprietary AlphaWise City Vibrancy Index reported growth of 5ppt. Within the top 50 cities, consumer services like retail book stores, restaurants (including fast-food chains) and multiplexes have seen the fastest growth during the past six-month period within the consumption component of the vibrancy index. To us, this reaffirms the underlying growth in discretionary consumption. Other key findings of the report:

  • All three vibrancy index components (consumption, job opportunities, and financial penetration) reported sequential acceleration pointing that urbanization trends are still intact in India.
  • The pace of growth of each of the components has been 8%, 4% and 3%, respectively. Of the three components, job opportunities index has grown the fastest.
  • The report reveals that Bangalore, Chandigarh, Hyderabad, Pune and Chennai are the top 5 vibrant cities.
  • The relative vibrancy score for cities like Ludhiana and Meerut is inching close to scores of cities like Mumbai and Delhi, respectively.

Morgan Stanley AlphaWise conducts evidence-based investment research to help validate key investment debates on behalf of Morgan Stanley Research analysts worldwide. The team employs innovative techniques to derive differentiated insights and forecasts – market research, Web mining, and real-time data sets.

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