Aditi Nayar

Economy
Chief Economist, Head-Research & Outreach, ICRA

Signs of improvement in investment activity

Investment activity improved somewhat in Q2 FY2025 after the election-led lull in Q1 FY2025, even as excess rainfall during August-September 2024 likely weighed on construction activity in the quarter. As anticipated, new project announcements witnessed a healthy rebound to Rs. 6.7 trillion in Q2 FY2025 from a multi-quarter low of Rs. 2.2 trillion in Q1 FY2025, registering a quarter-on-quarter (QoQ) expansion of 207%. This was in sync with the historical trends, wherein new proposals picked up sharply in Q2 after the lull seen during the Parliamentary elections. The QoQ increase in cost of announcements in Q2 FY2025 was much stronger by the private sector (to Rs. 5.2 trillion from Rs. 1.1 trillion) than by the Government (to Rs. 1.5 trillion from Rs. 1.1 trillion).

Vinay Kumar G

Airport Infrastructure Sector
Vice President & Sector Head - Corporate Ratings, ICRA

Indian air cargo volumes to witness new highs in FY2025e

ICRA projects the overall air cargo volumes to witness healthy growth of around 9-11% YoY to around 3.6-3.7 million tonnes in FY2025, supported by 11%-13% expansion in international and 4%-6% growth in domestic cargo. The international cargo volumes have seen a muted YoY rise of 1% in H1 FY2024 on the back of the slowdown in the global economy and geo-political conflicts. However, the international cargo volumes have seen a healthy expansion of 18% in H2 FY2024, amid the Red Sea crisis, which started in October 2023. Consequently, the seaborne cargo traffic was impacted, which in turn benefitted international air cargo traffic.

Girishkumar Kadam

Non-Ferrous Metals Sector
Senior Vice-President and Group Head, Corporate Ratings – Corporate Ratings, ICRA

Robust prices and resilient domestic demand to drive the performance of domestic base metal companies in FY2025

ICRA expects the credit profile of the domestic non-ferrous metal players to remain healthy in FY2025 driven by resilient base metal prices. According to ICRA's latest research, international base metal prices rose by ~12-14% in 7M FY2025 compared to the same period last year. While potential downside risks in the second half of FY2025 cannot be ruled out, low inventories and ongoing supply constraints are expected to limit any sharp price corrections during this period. Additionally, the stimulus announced by the Chinese government along with interest rate cuts in the US are supporting metal prices. In the domestic market, while the coal costs remain stable, the rising alumina costs, due to supply constraints, pose a near-term concern for the non-integrated aluminium players. Nonetheless, ICRA projects the buoyant metal prices to support the operating margins for domestic non-ferrous metal companies in FY2025.

Srikumar Krishnamurthy

Apparels Sector
Senior Vice President & Co-Group Head – Corporate Ratings, ICRA

Revenues of Indian apparel exporters to grow by 9-11% in FY2025

ICRA expects the Indian apparel exporters1 to register a 9-11% revenue expansion in FY2025, aided primarily by the gradual liquidation of retail inventory in the key end markets and a shift in global sourcing to India, a part of the derisking strategy adopted by several customers. This follows a tepid performance in FY2024 when exports were affected because of high retail inventory, sluggish demand from the key end markets, supply chain issues (including the Red Sea crisis) and heightened competition from neighbouring countries. The long-term prospects for Indian apparel exports are favourable, aided by enhanced product acceptance in end markets, evolving consumer trends and a boost from the Government in the form of the production-linked incentive (PLI) scheme, export incentives, the proposed free trade agreement with the UK and the EU, among others. With the revival in demand, ICRA expects the capex spending to increase in FY2025 and FY2026 and may stay in the range of 5-8% of the turnover.