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Nirmal Bang Report
Key Points
Gross domestic product growth came in at 7.8% YoY in Q1 FY24 (our estimate: 7.9% and Bloomberg consensus: 7.8%) while gross value added stood at 7.8% YoY (our estimate: 8.3% and Bloomberg consensus: 7.7%). Nominal GDP growth stood at 8% YoY with the GDP deflator coming in at 0.18%.
Agriculture output grew by 3.5% YoY (our estimate: 3.6%). Industry output (excluding construction) grew by 4.6% YoY (our estimate: 12.7%) as manufacturing sector growth disappointed at 4.7% YoY (our expectation: 15%). Services output (including construction) grew by 10% YoY (our estimate: 7.7%). Services growth was led by financial, real estate and professional services, which grew by 12.2% YoY (our estimate: 7%). Construction sector growth disappointed at 7.9% YoY (our estimate: 15%).
Private consumption was up by 6% YoY while gross fixed capital formation was up by 8% YoY. Government expenditure however declined by 0.7% YoY.
We have maintained our FY24 GDP forecast at 6.2% while revising down our GVA estimate to 6% from 6.3% earlier as manufacturing and construction sector growth has disappointed in Q1 FY24.
FY24 GDP seen at 6.2%:
We have maintained our FY24 GDP forecast at 6.2% while revising down our GVA estimate to 6% from 6.3% earlier as manufacturing and construction sector growth has disappointed in Q1 FY24.
We expect sustained capex recovery, healthy corporate and bank balance sheets and government spending ahead of Lok Sabha elections next year to support growth in the ensuing quarters despite some slowdown.
Risks largely emanate from a poor monsoon, elevated inflation impinging on consumption recovery and tightening financial conditions.
The impact of a poor monsoon may however be mitigated by healthy kharif sowing trends, particularly for rice and reducing dependence on agriculture in rural areas.
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