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MOSL: CAPITAL GOODS-Capex tracker – New project announcements decline sharply in FY18

Capital Goods: Capex tracker – New project announcements decline sharply in FY18; Stalled projects remain elevated

 

We highlight key takeaways from the projects data released by the Centre for Monitoring Indian Economy (CMIE). We use this as a proxy for the Indian capex cycle. CMIE tracks projects across various stages of announcement, implementation and completion, and takes into account stalled/shelved projects.

 New project announcements at lowest level since FY05

• New project announcements stood at INR6.6t in FY18, implying a dip of 52% YoY and the lowest since FY05. Private sector projects fell to their lowest since FY04 to INR3.7t (-51% YoY) and accounted for 56% of the total new projects. Even government projects declined 54% YoY to INR2.9t (the lowest since FY05). Within the government projects, the central government projects contributed 51% and the balance was contributed by the state and local governments. A sectorial analysis of proposals in FY18 indicates a steep decline in Transport Services (-77% YoY; INR504b) and Manufacturing (-29% YoY; INR587b) and Construction and Real estate (-45% YoY; INR200b).
•  Even on a quarterly basis, 4QFY18 saw a decline of 53% in new project announcements – the seventh consecutive quarter of decline. However, on a sequential basis, new project announcements showed a revival in 4QFY18 with 62% growth.