MOSL: ECOSCOPE-IIP rises 3.8% in September-Manufacturing, mining activity – key drivers of growth

​ECOSCOPE: IIP rises 3.8% in September; Manufacturing, mining activity – key drivers of growth

• The Index of Industrial Production (IIP) rose 3.8% YoY in September 2017, exactly in line with our estimate and marginally lower than consensus of +4.1%. Growth was largely driven by the manufacturing sector.
  
• Manufacturing growth came in at 3.4% YoY in September 2017, unchanged from the previous month, but higher than average 1.6% growth over April-August 2017. Growth was not broad-based - as many as 12 of the 23 industry groups within manufacturing reported a contraction in output.
  
• As per use-based classification, growth in capital goods output touched a six-month high of 7.4% YoY in September 2017 on account of a favorable base effect. Consumer durables output (-4.8% YoY), however, remained weak.
  
• IIP growth dropped to 2.5% YoY in 1HFY18 from 5.8% YoY in the year ago period. We expect IIP growth to improve in 2H owing to a favorable base. Our full-year growth estimate is ~3.1% for FY18 v/s 4.6% in the previous year.