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MOSL: CAPITAL GOODS-Capex tracker – Project announcements increase after two years of downtrend

Capital Goods: Capex tracker – Project announcements increase after two years of downtrend; Revival in 2QFY19 driven by the private sector

 

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. The CMIE tracks projects across various stages of announcement, implementation and completion, and takes into account stalled/shelved projects.

 New project announcements increase after eight quarters of decline

• New project announcements increased 12% YoY to INR1.5t in 2QFY19, driven primarily by the consumer goods (+886% YoY, INR25b), metals & mining (+229% YoY, INR361b), information technology (+226% YoY, INR21b) and electricity (+121% YoY, INR314b) sectors. Key new projects announced during the quarter were (a) Xiaomi mobile component facility (worth INR14b), (b) RINL plant (INR300b), (c) Reliance Jio Infocom project (INR10b) and (d) Ropar super critical power plant by Punjab State Power Corporation (INR160b).
• Private sector project announcements increased 34% YoY (off a weak base) to INR731b in the quarter, with Vistara Airlines ordering 6 Boeing and 13 airbus aircraft for INR215b. Private sector projects accounted for 49% of the new projects announced in 2QFY19.
• Government project announcements dropped 2% YoY to INR762b (central government projects contributed 61%; balance contributed by state and local governments) in 2QFY19.
• For 1HFY19, new project announcements declined marginally by 1% YoY to INR4.0t owing to a decline in government project announcements (-41% YoY to INR1.2t), partly offset by increased private sector announcements (+40% YoY to INR2.8t).