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MOSL: CAPITAL GOODS | Capex tracker-Private capex still far from peak-New project announcements decline sharply

​Capital Goods | Capex tracker: Private capex still far from peak; New project announcements decline sharply

Growth in projects under execution stable QoQ at 5%

Growth in projects under execution stood at 5% YoY to INR97.9t. Of this, 57% (INR55.3t) was contributed by government projects and 43% (INR42.6t) by private projects. Capex in the private sector, which at peak contributes ~60% of overall capex, continues to be muted, given the uncertain demand environment and low capacity utilization. Sector-wise, growth was primarily driven by metals and metals products (INR4.9t, +5% YoY), mining (INR4.0t, +16% YoY) and services (INR38.6t, +14% YoY). Construction and real estate, however, witnessed de-growth of 8% to INR10.2t.

New project announcements down 22% YoY

New project announcements declined 22% YoY (INR2.6t) in 4QFY17, led by a drop in fresh project announcements in the manufacturing and electricity segments. The decline can be ascribed to a sharp fall in government project announcements (INR529b, -44% YoY). Announcements in the manufacturing sector declined 58% YoY (INR654b), led by weakness in sub-segments like chemicals, consumer goods, metals, machinery and transport equipment, while those in the electricity segment fell 40% YoY to INR326b. The service sector, however, registered strong growth of 36% YoY (INR1.4t) in project announcements, led by 69% YoY growth in transport services (INR1.1t), mainly on account of the large announcement being made by Spice Jet for Boeing planes for INR731b and by Dhruv for 32 helicopters for INR80b.