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13 OCT 2016
IIP
Scope for improvement
The Aug-16 IIP print confirms the presence of
reasonable slack in the economy. However the
quantum of the same is grossly overstated. The
decline in headline IIP was mainly on account of the
anomalous head of rubber cables (reduction of 3.1
percentage points from headline print) within
capital goods. The same is expected to be rectified
with the introduction of a new series before the
end of CY17. However, even if the spurious effects
of the same are filtered through, the industrial
output was tepid. Electricity, mining and consumer
non durables slowed down substantially. However,
affirmative policy actions (MIP) have started
impacting industrial production (steel +17%,
cement +3.1%).Going ahead, the allocations for
roads, railways and the power sector in the Union
Budget will boost industrial production. The same
(Govt spends) will be under duress if the OPEC
freeze goes through. With the conclusion of normal
monsoons the slack in the capacity utilisation will
abate aided by 7th CPC and incipient festive
demand. On the other hand, recovery in exports is
challenging owing to the subdued global macro
environment.
IIP for Aug-16 declined 0.7% vs. +6.3% YoY and Romit Fernandes
romit.fernandes@hdfcsec.com
+91-99301-24556
HDFC securities Institutional Research is also available on Bloomberg HSLB <GO> & Thomson Reuters
IIP Snapshot
5M
FY16
1.3%
4.5%
3.2%
4.1%
4.6%
7.2%
3.2%
3.0%
4.5%
Coal
4.4
-9.2%
0.5%
5.1%
2.6%
Crude Oil
5.2
-3.9%
5.6%
-1.8%
-3.1%
1.7
-5.7%
3.7%
3.3%
-4.2%
5.9
3.5%
5.8%
13.7%
7.6%
1.9%
Natural Gas
Refinery
Products
Fertilizers
1.3
2.8%
14.3%
-4.0%
6.4%
2.9%
Steel
6.7
17.0%
-3.3%
-0.5%
5.5%
Cement
2.4
3.1%
5.4%
1.4%
4.4%
10.3
0.1%
5.6%
1.6%
5.7%
7.5%
1.9%
10.0
0.0
-10.0
-12.5
-16.3
-25.3
-21.46
Jun-16
YTD Growth
-29.5
-40.0
Source: CSO
-22.2
Aug-16
-30.0
Jul-16
-20.0
%YoY
%YoY
3.5
2.4
1.3
2.0
1.8
2.3
-0.7
-1.3
2.9
-0.3
-2.5
YTD Growth
17.3
6.0
5.0
4.0
3.0
2.0
1.0
0.0
-1.0
-2.0
-3.0
Aug-16
Jul-16
13.9
Electricity
Source: CSO
Jun-16
19.2
%YoY
5M
FY16
3.2%
May-16
20.0
%YoY
5M
FY17
37.9
Apr-16
30.0
Weight
Aug-16 Aug-15
(%)
Core
May-16
Apr-16
Weight
5M
Aug-16 Aug-15
(%)
FY17
Mining
14.2 -5.6%
4.5%
0.6%
Manufacturing
75.5 -0.3%
6.6% -1.2%
Electricity
10.3
0.1%
5.6%
5.7%
IIP
100.0 -0.7%
6.3% -0.3%
Basic goods
45.7
3.2%
3.7%
3.9%
Capital Goods
8.8 -22.2% 21.3% -21.5%
Intermediate
15.7
3.6%
2.8%
3.9%
goods
Consumer
29.8
1.1%
6.0%
0.9%
goods
Durables
8.5
2.3% 17.0%
6.3%
Non-durables
21.3
0.1%
-0.9% -2.8%
Source: CSO
Source: CSO
Page | 2
Breakup of Manufacturing
Consumer non-durables was
flat vs.-1.4% YoY and -0.9%
sequentially led by apparels
Based on Use
Cons non-dur
Intermediate
Basic
Capital
Consumer Dur
Manufacturing
IIP
Source : CSO
Items
Food Products, Beverages
Tobacco
Textiles
Wearing Apparel; Dressing And
Dyeing Of Fur
Luggage, Handbags, Saddlery,
Harness & Footwear; Tanning And
Dressing Of Leather Products
Wood And Products Of Wood Cork
Except Furniture; Articles Of Straw &
Plating Materials
Paper And Paper Products
Publishing, Printing & Reproduction
Of Recorded Media
Coke, Refined Petroleum, Nuclear
Fuel
Chemicals And Chemical Products
Rubber, Plastic Products
Other Non-metallic Minerals
Basic Metals
Fabricated Metal Products, Except
Machinery & Equipment
Machinery And Equipment
Office, Accounting & Computing
Machinery
Electrical Machinery & Apparatus
Radio, TV And Communication
Equipment
Medical, Precision & Optical
Instruments Watches And Clocks
Motor Vehicles, Trailers And SemiTrailers
Other Transport Equipment
Furniture; Manufacturing
Weight
Aug-16
Jul-16
Aug-15
5MFY17
5MFY16
7%
2%
6%
0.7%
8.1%
0.4%
-0.8%
22.3%
2.3%
-8.9%
-9.4%
3.9%
4.2%
2.6%
8.3%
-7.0%
-7.1%
2.0%
3%
-6.6%
-16.2%
19.3%
2.7%
18.3%
1%
-1.8%
-10.1%
7.8%
-50.9%
4.4%
1%
2.2%
-7.9%
3.3%
13.2%
10.0%
1%
-4.2%
-0.8%
-1.3%
-0.8%
1.9%
1%
0.7%
-0.9%
-9.1%
5.4%
-6.7%
7%
3.3%
12.3%
10.2%
8.4%
7.2%
10%
2%
4%
11%
5.0%
2.7%
2.2%
12.4%
5.4%
3.6%
-0.2%
2.0%
4.3%
0.7%
2.2%
-2.6%
-5.8%
0.6%
-1.2%
5.7%
3.6%
0.8%
-1.8%
6.5%
3%
1.8%
-3.4%
9.8%
-0.3%
1.8%
4%
6.0%
8.8%
3.6%
8.9%
4.0%
0.3%
-5.2%
-9.9%
0.5%
5.5%
-12.0%
2%
-49.4%
-59.2%
40.3%
-51.3%
11.8%
1%
15.2%
10.9%
-9.1%
12.6%
-14.5%
1%
-6.4%
-16.8%
-2.9%
0.7%
-5.6%
4%
3.6%
3.6%
11.3%
5.9%
7.7%
2%
3%
75.5%
100%
14.6%
-22.4%
-0.3%
-0.7%
1.5%
-2.5%
-3.4%
-2.4%
1.7%
90.8%
6.6%
6.3%
6.7%
-0.2%
-1.4%
-0.2%
1.5%
45.4%
4.5%
4.1%
Page | 3
Apr-13
May-13
Jun-13
Jul-13
Aug-13
Sep-13
Oct-13
Nov-13
Dec-13
Jan-14
Feb-14
Mar-14
Apr-14
May-14
Jun-14
Jul-14
Aug-14
Sep-14
Oct-14
Nov-14
Dec-14
Jan-15
Feb-15
Mar-15
Apr-15
May-15
Jun-15
Jul-15
Aug-15
Sep-15
Oct-15
Nov-15
Dec-15
Jan-16
Feb-16
Mar-16
Apr-16
May-16
Jun-16
Jul-16
Aug-16
Apr-13
May-13
Jun-13
Jul-13
Aug-13
Sep-13
Oct-13
Nov-13
Dec-13
Jan-14
Feb-14
Mar-14
Apr-14
May-14
Jun-14
Jul-14
Aug-14
Sep-14
Oct-14
Nov-14
Dec-14
Jan-15
Feb-15
Mar-15
Apr-15
May-15
Jun-15
Jul-15
Aug-15
Sep-15
Oct-15
Nov-15
Dec-15
Jan-16
Feb-16
Mar-16
Apr-16
May-16
Jun-16
Jul-16
Aug-16
Basic goods
Capital goods
Manufacturing
Electricity
Intermediate goods
IIP(General)
12.0%
10.0%
8.0%
6.0%
4.0%
2.0%
0.0%
-2.0%
-4.0%
-6.0%
Source : CSO
12.0%
10.0%
8.0%
6.0%
4.0%
2.0%
0.0%
-2.0%
-4.0%
-6.0%
-8.0%
Source: CSO
Page | 4
Apr-11
May-11
Jun-11
Jul-11
Aug-11
Sep-11
Oct-11
Nov-11
Dec-11
Jan-12
Feb-12
Mar-12
Apr-12
May-12
Jun-12
Jul-12
Aug-12
Sep-12
Oct-12
Nov-12
Dec-12
Jan-13
Feb-13
Mar-13
Apr-13
May-13
Jun-13
Jul-13
Aug-13
Sep-13
Oct-13
Nov-13
Dec-13
Jan-14
Feb-14
Mar-14
Apr-14
May-14
Jun-14
Jul-14
Aug-14
Sep-14
Oct-14
Nov-14
Dec-14
Jan-15
Feb-15
Mar-15
Apr-15
May-15
Jun-15
Jul-15
Aug-15
Sep-15
Oct-15
Nov-15
Dec-15
Jan-16
Feb-16
Mar-16
Apr-16
May-16
Jun-16
Jul-16
Aug-16
Manufacturing contracted by
0.3% vs +6.6% YoY and -3.5%
sequentially led by capital
goods, contraction of 22.2% vs
+21.3% YoY and -29.5 %
sequentially
12.0%
10.0%
8.0%
6.0%
4.0%
2.0%
0.0%
-2.0%
-4.0%
-6.0%
-8.0%
Jan-12
1.1%
Feb-12
4.1%
Mar-12 -3.6%
Apr-12
-1.8%
2.6%
May-12
Jun-12 -3.2%
Jul-12
0.0%
2.4%
Aug-12
Sep-12
-1.6%
Oct-12
-0.8%
Nov-12
9.9%
Dec-12
-0.8%
2.7%
Jan-13
Feb-13
2.1%
Mar-13
4.3%
Apr-13
-3.2%
1.8%
May-13
Jun-13
-1.7%
3.0%
Jul-13
Aug-13
-0.2%
Sep-13
1.4%
Oct-13
-1.3%
-2.6%
Nov-13
Dec-13
-1.1%
Jan-14
0.3%
Feb-14 -3.9%
Mar-14
3.0%
-1.3%
Apr-14
5.9%
May-14
Jun-14
-0.3%
2.9%
Jul-14
Aug-14
-1.1%
Sep-14
2.7%
Oct-14
Nov-14 -5.6%
4.7%
4.1%
Dec-14
Jan-15
3.4%
Feb-15
5.1%
Mar-15
2.7%
Apr-15
3.9%
May-15
2.1%
Jun-15
5.2%
Jul-15
4.8%
Aug-15
6.6%
Sep-15
2.7%
Oct-15 -4.6%
Nov-15
10.6%
Dec-15
-1.9%
Jan-16
Feb-16
0.6%
-2.9%
Mar-16
-1.0%
Apr-16
0.7%
May-16
-3.6%
Jun-16
0.7%
Jul-16 -3.5%
Aug-16
-0.3%
10.0%
8.0%
200.0
6.0%
4.0%
150.0
2.0%
0.0%
100.0
-2.0%
-4.0%
50.0
-6.0%
0.0
Source : CSO
Manufacturing
Manufacturing
Source : CSO
Page | 5
Mining
2.0%
0.0%
-2.0%
-6.0%
-4.0%
-8.0%
-10.0%
20.0%
15.0%
10.0%
5.0%
0.0%
-5.0%
Jan-12
-2.1%
Feb-12
2.3%
-1.1%
Mar-12
Apr-12
-2.8%
-0.7%
May-12
Jun-12
-1.1%
Jul-12
-0.3%
-3.5%
Aug-12
Sep-12
2.2%
Oct-12
-5.5%
Nov-12
-0.2%
Dec-12
-3.1%
-1.8%
Jan-13 -7.7%
Feb-13
Mar-13
-2.1%
Apr-13
-5.9%
-3.4%
May-13
Jun-13
-4.6%
-3.0%
Jul-13
Aug-13
-0.9%
Sep-13
3.6%
Oct-13
-2.9%
1.6%
Nov-13
Dec-13
2.6%
Jan-14
2.7%
Feb-14
2.3%
Mar-14
1.7%
0.5%
Apr-14
2.5%
May-14
Jun-14
0.1%
4.8%
Jul-14
1.2%
Aug-14
Sep-14
0.1%
4.5%
Oct-14
Nov-14
-1.7%
4.0%
Dec-14
Jan-15
-1.8%
Feb-15
1.6%
1.2%
Mar-15
-0.6%
Apr-15
May-15
2.1%
Jun-15
-0.4%
Jul-15
1.3%
Aug-15
4.5%
3.5%
Sep-15
Oct-15
5.3%
Nov-15
1.7%
Dec-15
2.8%
Jan-16
1.5%
Feb-16
5.0%
Mar-16
0.3% 0.7%
Apr-16
May-16
1.7%
Jun-16
Jul-16
5.3%
Aug-16
0.9%
-5.6%
6.0%
0.1%
Jan-12
3.2%
8.0%
Feb-12
2.7%
Mar-12
4.6%
Apr-12
May-12
5.9%
8.8%
Jun-12
2.8%
Jul-12
Aug-12
1.9%
3.9%
Sep-12
Oct-12
5.5%
2.4%
Nov-12
Dec-12
5.2%
Jan-13
6.4%
Feb-13
3.5%
Mar-13 -3.2%
Apr-13
4.2%
6.2%
May-13
Jun-13
7.2%
Jul-13
0.0%
5.2%
Aug-13
12.9%
Sep-13
Oct-13
1.3%
6.3%
Nov-13
Dec-13
7.5%
6.5%
Jan-14
11.5%
Feb-14
Mar-14
5.4%
Apr-14
11.9%
May-14
6.7%
15.7%
Jun-14
11.7%
Jul-14
Aug-14
12.9%
Sep-14
3.9%
13.7%
Oct-14
Nov-14
4.8%
10.0%
Dec-14
Jan-15
3.3%
Feb-15
5.9%
Mar-15
2.0%
Apr-15
6.0%
May-15 -0.5%
Jun-15
3.5%
1.2%
Jul-15
Aug-15
Sep-15
5.6%
11.4%
Oct-15
Nov-15 0.7%
9.0%
Dec-15
3.2%
Jan-16
9.6%
Feb-16
6.6%
Mar-16
11.8%
Apr-16
4.7%
14.6%
May-16
Jun-16
Jul-16
8.3%
1.6%
Aug-16
Mining
Source : CSO
Electricity
Electricity
Source : CSO
Page | 6
Capital goods
Intermediate goods
Consumer goods
20.0%
10.0%
0.0%
-10.0%
-20.0%
-30.0%
Aug-16
Jun-16
Apr-16
Feb-16
Dec-15
Oct-15
Aug-15
Jun-15
Apr-15
Feb-15
Dec-14
Oct-14
Aug-14
Jun-14
Apr-14
Feb-14
Dec-13
Oct-13
Aug-13
Jun-13
Apr-13
Feb-13
Dec-12
Oct-12
-40.0%
Aug-12
IIP(General)
30.0%
Jun-12
Source : CSO
Page | 7
Disclosure:
I, Romit Fernandes, MBA, author and the name subscribed to this report, hereby certify that all of the views expressed in this research report accurately reflect our views about the subject
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