Monthly Report September 2016

Transcription

1 Monthly Report September 216

2 Summary growth trends for the month of Sep 216 Overall, September registered a growth of ~8% for the Indian industry, continuing on its recovery path post July, riding on the back of a good monsoon Growth was moderate across regions with South giving up it's month leader position to West which witnessed a 1% growth in value. East witnessed the slowest growth at % and North and South performing similarly, growing at 8% and 9% respectively Inflation for Sep 216 (difference between value and volume growth) seemed marginal across geographies 2-wheelers (~14%), Passenger vehicles (~12%), Building materials (8%) emerged as winners in September; Engineering sector (7%) and textiles and apparels (8%) showed healthy growth, while Auto Components (~2.%) and Commercial vehicles (~2.%) witnessed relatively weak growth 1. Not all respondents filled in regional growth numbers. Average of regional growths therefore, may not coincide with national average. The growth numbers reported are on an year-on-year basis. Inflation reported above is the value over volume growth based on the survey results. Source: CII BCG Growth Index Survey; Industry association data on automotive sales 1

3 Survey results: September 216 performance Summary all respondents Regional growth All respondents 1 YoY growth % % 6% 9% 8% 6% 4% 9% 8% 8% 8% 4 % 3% Apr 16 May 16 Jun 16 Jul 16 Aug 16 Value Sep 16 Volume North: 7% (8%) Peer growth comparison Volume growth (%) Industry growth comparison Volume growth (%) Building Products CV 2 Wheelers PV Engineering Products Auto components West: 1% (9%) South: 7% (9%) East: 6% (%) Region xx: xx% (yy%) Value growth (%) All industry average Value growth (%) All industry average Value growth yoy Volume growth yoy 1. Not all respondents filled in regional growth numbers. Average of regional growths therefore, may not coincide with national average. The growth numbers reported are on an year-on-year basis Note: Building materials (BM) industry refers to cement, cementitious products, paints, tiles, roofing, scaffolding. Industry average is displayed only when there are 3+ responses per industry. Other industries where responses were received include: consumer durables, Steel, chemicals, plastics, logistics, packaging, Consulting services, Financial services. Regional averages may not fully align with national average because of different regional exposures of respondent industries. All averages are 'simple averages' (i.e. not weighted by size of company). CV Commercial vehicles, PV Passenger vehicles, Auto Comp Auto Components, Engg prod & services Engineering products and services, Build. mater. Building Materials, MHE Material Handling Equipment Source: CII BCG Growth Index Survey; Industry association data on automotive sales 2

4 Building materials witnessed a stable growth of ~7% with West contributing more than the South Peer growth comparison Regional growth All respondents 1 Volume growth (%) 2 < cr North: 3% (%) Value growth (%) All industry average Building materials grew at the same steady pace of 7% as compared to August West: 1% (1%) East: 3% (3%) West leads in both value and volume growth, over-taking the South which has been a leading market since July Average monsoons pan-india have given a positive outlook to the cement industry which faced the lowest demand growth in the first nine months of FY 216 South: 7% (8%) Region xx: xx% (yy%) Road construction is expected to pick up as well with positive sentiments on road awards, ~1,km expected to be awarded in FY 217 by NHAI and MoRTH Value growth yoy Volume growth yoy 1. Not all respondents filled in regional growth numbers. Average of regional growths therefore, may not coincide with national average. The growth numbers reported are on an year-on-year basis. Building materials include cement, cementitious products, paints, tiles, roofing, scaffolding, and glass. No. of "visible" data points on the graph is less than the number of respondents due to overlaps. Source: CII BCG Growth Index Survey, CMIE, Projectstoday 3

5 Increased investments across construction and retail real estate nurture positive sentiments for both sectors Demand drivers Infrastructure Real Estate (Residential) Real Estate (Office) Real Estate (Retail) Key trends/indicators Order inflows have almost doubled since FY 213 in the construction sector, even though this is benefitting road players most. Revenue for companies has seen only a marginal growth of 11% Infrastructure capex is likely to stand at USD 124bn at the end of FY 217E, with 2% share of the private sector (thermal power, telecom and renewables) Leverage has increased across the industry driven by poor working capital management and investment in non-core business like BOT assets and real estate (also contributing to low returns) Infrastructure output went up by 3.3% in August 216 driven by increased production in Steel (+17%), fertilizers (+%) and cement (+3.1%). In Q2 of 216, top 6 cities 1 noted the launch of about 24, new residential units, taking the H1 216 total to approximately 42, units Absorption of real estate declined by 2% YoY for top 8 cities while launches halved; total inventory of 1,1 million sq ft is expected to take ~3yrs to sell (last 3 month absorption rate) Telangana claimed a record growth of 32.1% in net revenue collections fueled by real estate growth (~.76 lakh registrations of lands and buildings), highest among all Southern states 2bps repo rate cut expected to boost demand and nudge the sector towards a revival in H2 of '16 Mumbai figures among top three cities globally that will add the maximum supply of Grade-A office space through 217, current stock at 16million sq ft expected increase by 16million sq ft over Q3 and Q4. Only 1.6 million sq.ft expected in BKC and secondary business districts Chennai has witnessed almost 1% YoY increase in rentals given shortage in supply NBCC received orders worth INR 1,177 crore in September of which INR 44 cr is for hospital construction and INR 27 cr for University Grants Commission building complex New mall supply increased to 4.8 million sq ft in the H1 '16 from a mere.2 msf in H1 '1 Share of retail sector assets in cumulative PE investments increased to 18% in H1 '16 from 2% a year earlier as investment of ~INR 3,3 cr flowed in 1. Top 6 Cities include Bengaluru, Chennai, Pune, Mumbai, Noida and Gurgaon Source: BCG Internal Research, CMIE, Ministry of Power, RBI, Cushman and Wakefield, JLL, Coliers International 4

6 Construction sector going through a lull phase Construction GDP showed flat growth Capital formation growth is also in negative territory INR Billion Percentage of Total Value Added GFCF Growth (YoY) 2, +% +6% +2% 1 1 2, 8 1 1, 6 1, 4 2 Q1 14 Q2 14 Q3 14 Q4 14 Q1 1 Q2 1 Q3 1 Q4 1 Q1 16 Q2 16 Q3 16 Q4 16 Q Jan-12 Jan-13 Jan-14 Jan-1 Jan-16 Share in total value added has been decreasing since Q2'1 while GFCF is consecutively fell for three quarters Source: RBI, CMIE

7 Credit deployment in infrastructure and construction sector is on a downward trend falling by 19% since Jan 216 INR Bn 12, 9, ,16 1,166 1,789 1, ,161 1,77-19% ,112 1,19 1,12 1, ,38 Other Construction 6, 1,76 1,827 1,84 1,83 1,63 Infrastructure 3,,992 6,4,799,382,386,288,24,217 Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Construction Telecom Other Infrastructure Roads Power Note: Includes repayments as well Source: RBI 6

8 However, investment has improved in quarter ended Sept. 216 Total Investment (INR Cr) 2, Cost per project (INR Cr) , 2 1, , % 79 1, 4 19 Jun-1 Sep-1 Dec-1 Mar-16 Jun-16 Sep-16 No. of project announced All construction projects Source: CMIE 7

9 Traffic movement, freight & passengers, increased only marginally; road construction 6km/day average Freight traffic movement Passenger traffic movement Traffic at Airports ' Tonnes Mn Nos Apr-16 May-16 Jun-16 Jul-16 Aug-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 LY figures International Freight Domestic Freight International Passengers Domestic Passengers Road construction trudging ahead with erratic progress at 6 km / day Kms Kms Construction of Roads 1,4 2 1,81 1,343 Jun-1 1,11 14,21 14,11 14,11 13,7 13,633 13,373 12,489 12, Jul-1 Sep-1 Oct-1 Nov-1 Dec-1 Jan-16 Feb-16 Mar-16 Apr-16 12, May-16 11,97 11, Jun-16 Jul-16 2, 1, Total Length yet to be awarded by NHAI Achievement during the month Note: Achievement refers to roads 2/4/6/8 laned during the month. Length yet to be awarded includes highways under NHDP, Port connectivity roads, Other National Highways and SRDP-NE roads Source: NHAI 8

10 West witnessed highest project launches in Sept while roadways and railways continues to dominate investments Estimated cost (INR cr.) of new projects (Mar Sept) Estimated cost of new projects in September 216 Roadways Mar - May 33,23 Jun - Aug 4,939 Sept 21,69 Total 1,738 >1,3 cr worth of projects launched >8,7 cr worth of projects launched Ports/airport/ railways 1,34,93 1,342 17, ,218 North Power & Energy Real estate (Residential) Real Estate (Commercial) 19,837 2,683 9,629 29,4,182 4,334 6,291 2,629 72, ,71 >19,8 cr worth of projects launched West South East Total 2,23,39 99,81 49,187 >9,8 cr worth of projects launched Roadways and Railways together constitute ~8% (by value) of new projects in Sept 216; North and West together constitute >6% (by value) of new projects in Sept Note: Includes projects from Infra, Real Estate etc but does not include industrial construction Source: Projects Today 9

11 Engineering products registered healthy growth across all the regions, strongest in West Peer growth comparison Regional growth All respondents 1 Volume growth (%) 2 < cr Value growth (%) All industry average Engineering products and services maintained its momentum from August growing at ~1% in value India's export grew at nearly % in September and witnessed a positive growth second time since June. Gems and jewelry exports are showing positive trend and textiles and handicrafts are also up. Global risks fueled by falling crude oil prices and geopolitical factors like Brexit may challenge growth in next quarter North: 6% (%) West: 8% (7%) South: 6% (7%) East: 7% (6%) Region xx: xx% (yy%) Improved demand from ancillary industries like auto units and small scale sectors, sustained the high demand Value growth yoy Volume growth yoy 1. Not all respondents filled in regional growth numbers. Average of regional growths therefore, may not coincide with national average. 2. Capacity addition and distribution lines data is for Jul Export rise is on YoY for Apr Aug period. No. of "visible" data points on the graph is less than the number of respondents due to overlaps. The growth numbers reported are on an year-on-year basis. MHE Material handling equipments. Source: CII BCG Growth Index Survey 1

12 Automotive components witnessed a weak growth across India, losing more in value than volume Peer growth comparison Regional growth All respondents 1 Volume growth (%) 2 < cr Value growth (%) All industry average Automotive components witnessed negative growth of (.%) in value and a weak growth of 2.% in volume 2 wheeler sales boomed in the country with Honda 2 wheelers recording its highest sales ever, almost 1% more than its competitors Sales of PV was highest in terms of monthly sales in September as compared to the last 4 years The positive sentiment in the automotive segment is expected to be fueled further in October given good monsoons, wage hikes for government employees and the festive season North: 3% (%) West:.% (%) South: 2% (4%) East: 2% (%) Region xx: xx% Value growth yoy (yy%) Volume growth yoy 1. Not all respondents filled in regional growth numbers. Average of regional growths therefore, may not coincide with national average. The growth numbers reported are on an year-on-year basis. No. of "visible" data points on the graph is less than the number of respondents due to overlaps. Source: CII BCG Growth Index Survey 11

13 Automotive industry continued to grow on the account of new models and pre-festive season Passenger vehicle (PV) Commercial vehicle (CV) 2-wheelers Volume growth (%) All industry average Value growth (%) Volume growth (%) All industry average Value growth (%) Volume growth (%) Value growth (%) All industry average PV industry grew by ~12% due to higher wholesale volumes in anticipation of high festive demand MSIL s Sep-16 wholesales growth at whopping 31%; mini segment posted robust growth of 2% YoY and the compact segment posted 12% Tata's volumes grew on back of robust performance by Tiago CV segment grew marginally by 2.3% (YoY) M&HCV segment reported YoY decline for the fourth consecutive month in a row, recording 2% drop (YoY) in Sept '16 Except M&M, most players posted double digit de-growth in M&HCV segment Festive season fuelled the growth of 2 wheeler segment grew by 14% The positivity in the economy led by 7th Central Pay Commission, One Rank One Pension (OROP) disbursements and favourable monsoon has translated to a robust demand in two-wheeler sector Scaling new heights, Honda has reported its best-ever performance in Sept 216, breaching the, unit mark for the first time in its history of Indian operations 1. Not all respondents filled in regional growth numbers. Average of regional growths therefore, may not coincide with national average. The growth numbers reported are on an year-on-year basis. Revenue size of the companies not represented in the graph Source: CII BCG Growth Index Survey, Industry association data on automotive sales 12

14 Commercial vehicles sales and exports have been flat with ~1% growth over the last years Sales and exports break-up of total commercial vehicles sales # vehicles (in 's) 1, 79 +% % FY7 FY8 FY9 FY1 FY11 FY12 FY13 FY14 FY1 FY16 Domestic sales Exports Source: SIAM, BCG Analysis 13

15 Jul-1 Aug-1 Sep-1 Oct-1 Nov-1 Dec-1 Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Jul-1 Aug-1 Sep-1 Oct-1 Nov-1 Dec-1 Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Overall economic indicators: September 216 review Growth Indices Balance of payment measures Commercial vehicle sales Economy statistics Latest month Previous month India GDP growth est. (%) China GDP growth est. (%) Inflation WPI (%) Current account Exports growth* (%) 1 (y-o-y) Oil imports growth* (%) 1 (y-o-y) Non-oil imports growth (%) 1 (y-o-y) Latest month 1.2 (8.) (14.9) Previous month (6.3) (28.1) (14.) ' % +16% BSE Sensex 6 27,866 28,343 Trade deficit (US$ Bn) 1 (7.7) (7.8) Select industry metrics Capital account Passenger vehicle sales IIP (%) 7 (y-o-y) Energy req growth 1 (%) (y-o-y) (.7) 1. (3.4).4 NRI deposits (US$ Bn) 2 FII flows (US$ Mn) , ,37 ' +17% +8% PV Auto vol growth 8 (%) (y-o-y) CV Auto vol growth 8 (%) (y-o-y) Cement production (Mn Tn) 1 Steel production (Mn Tn) FDI flows (US$ Mn) 4 Forex reserves (US$ Bn) 3 Currency competitiveness 6 4, , *Not comparable as one of the data 1. As of Aug and Jul 2. Total outstanding values as of Aug and Jul 3. For Aug and July. Includes only equity flows. 4. As of end Aug and Jul. Average of GDP estimates for FY16-17 for China and India made by leading international financial institutions in Sep & Aug 6.As in Sep & Aug 7. As of Aug & Jul Note: CV refer to passenger and commercial vehicles resp. Source: RBI, Thomson One, Ministry of Finance monthly Report, Capitaline, EIS, BCG analysis, Press Search. 14

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