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Bhupali Gursale
022-3935 7800 Ext: 6820 bhupali.gursale@angelbroking.com
As per Quick Estimates on the Index of Industrial Production (IIP), industrial growth in March 2013 improved to 2.5% yoy, in line with market expectations.
It compares positively to a marginal 0.6% yoy growth in February 2013 and 2.8% yoy de-growth in March 2012 owing to growth in consumer non-durables and capital goods segments.
Overall during FY2013, the index decelerated and reported a shallow 1.0% growth as compared to 2.9% growth in FY2012 and a more robust 8.2% growth in FY2011 on account of broad-based slowdown amongst its components.
Growth in eight core industries (37.9% weightage in the index) recovered sharply to 2.9% in March 2013, having witnessed a decline of 2.4% in the previous month.
Use-based Classification
Mining Manufacturing Electricity Basic goods Capital goods Intermediate goods Consumer goods - Consumer durables - Consumer non-durables
The Consumer Durables segment contracted for the fourth straight month by 4.5% yoy indicating worryingly that the consumption slowdown continues to weigh on overall growth. On the other hand, Consumer non-durables reported a pick-up to 6.5% yoy (owing to a low base effect), supporting an overall 1.6% yoy growth in consumer goods. The consumer non-durables segment has contributed about 120bp to growth in the headline IIP growth print of 2.5% during March 2013. Overall during FY2013, the index decelerated and reported a shallow 1.0% yoy growth as compared to 2.9% yoy growth in FY2012 and a more robust 8.2% yoy growth in FY2011 on account of broad-based slowdown amongst its components. We believe that industrial activity is likely to have bottomed out in FY2013. We expect industrial activity as measured by the IIP to gradually improve to about 3.3% yoy in FY2014, owing to our expectation of growth of around 2.5% yoy in mining, 3.0% in manufacturing and 7.2% in electricity sector. We expect revival in industrial activity to be supported by a low base, lagged impact of monetary easing, the recent pick-up in exports and anticipated improvement in investment.
Weight 37.9 4.4 5.2 1.7 5.9 1.3 6.7 2.4 10.3
Mar-13 2.9 0.3 0.2 (17.7) 5.6 3.6 6.6 6.6 3.0
Feb-13 (2.4) (8.0) (4.0) (20.1) 4.3 (4.0) 0.5 3.1 (3.7)
Mar-12 3.0 7.3 (2.9) (9.9) 1.6 1.5 6.2 7.1 2.8
FY2013 2.6 3.3 (0.6) (14.5) 6.9 (3.4) 2.5 5.6 4.0
FY2012 5.0 1.3 1.0 (8.9) 3.1 0.4 10.3 6.7 8.1
(0.6) (4.0) (6.3) Capital Intermediate Consumer Durables Nov-12 Dec-12 Basic
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