ICRA pegs India’s Q2 GDP Growth to ease to 7.2%

After registering a robust growth in the first quarter of this financial year, the pace of India’s economic growth is expected to have substantially slowed in the July-September quarter amid higher fuel prices and a weaker rupee.

According to a report by rating agency ICRA, the GDP growth of Indian economy is pegged at 7.2 per cent for the second quarter, dragged down by lacklustre agriculture and industry. The GDP had grown by a higher than expected 8.2 per cent in the first quarter of the fiscal as compared to the year-ago period. 

The report cited higher fuel prices and weakness in rupee as primary factors dragging the industrial growth. Further, the country has been affected by heavy rains in some states leading to massive flooding while the other states are dealing with significantly deficient and drought like situations resulting in to muted agricultural growth.

As per the report, overall, manufacturing GVA (gross value added) growth is expected to ease to 7 per cent in Q2 FY 2019 from the healthy 13.5 per cent expansion in Q1FY2019. The agency said higher commodity prices may support a shallow recovery in GVA growth in mining and quarrying from the marginal 0.1 per cent in Q1 FY 2019 to around 2.5 per cent in Q2 FY 2019, despite a slowdown in volume growth.  

However, services sector growth is expected to rebound to 7.8 per cent in the second quarter from 7.3 per cent in Q1 FY 2019, buoyed by a sharp pickup in the expansion in the Government of India’s non-interest revenue expenditure, a mild rise in growth of bank deposits, air and ports cargo traffic, as well as a moderation in the pace of FII outflows.

Going ahead, the Indian economy is expected to slow down in the second half of the fiscal, partly because of the base effect of higher growth last year. Tighter financial markets, a credit squeeze and the lagged impact of weak currency and high oil prices will continue to weigh on growth.

Latin Manharlal Group

Companies report strong prospects from Railways Business: Extracts from commentary about Railways Business.

KEC International

Considering strong order book the railway business of the company is expected to close current fiscal with a revenues of about Rs 1500-1600 crore having clocked a revenues of about Rs 734 crore in H1FY19. The company has linked up with various vendors in railway business. With ramp up in railway business the vendor financing have also gone up. But backward integration by the company in Railways has resulted in improved profitability as well as reduction in payable days. Focus on streamlining railway supply chain, vendor base and credit terms.

Cummins Ltd

Within industrial construction sales stood at Rs 100 crore, rail Rs 100 and others form remaining sales. Railways have grown significantly and strong traction exists. Government efforts on infra sector is also helping the overall growth

Kalpataru Power Transmission Ltd

For the Sep 18 quarter, T&D revenues stood around Rs 1100 crore, Oil and gas and Railway together around Rs 450 crore. Margins in railways around 9-10%. Strong orders coming from Pipeline and Railways for next 2-3 years. Strong order inflows from Railways and International T&D in Sep 18 quarter.

SKF Ltd

Within industrials, railways account for around 7% of total sales. Strong traction seen from passenger wagon side, while the demand from freight side bearings will pick up from now.

Escorts

New products launched in Railways. Order book is more than Rs 400 crore will be executed.25% growth in Railways for FY 19 with margins of 18-20%.

lrcon International - Expect revenue of about Rs 4600 crore in FY19

Stand-alone executable order book of the company as end of Sep 30, 2018 was more than Rs 27000 crore up from about Rs 22400 crore as end of March 31, 2018. The executable order book consists of only projects where work has already commenced and if the order waiting for clearance and approvals are included the order book will be approximately over Rs 35000 crore. Since infrastructure projects in sectors like railways take 1-1.5 years to complete investigation/surveys and clearances etc, the company includes only the orders for which work commenced in the order book.

Rites India Ltd

Performance of first half is not representative of full year as typically 60% of the revenue of the company will accrue in second half. For FY19 the company is confident of maintaining/improving the FY18 EBITDA margin levels. The EBITDA margin for FY18 was 9.86% and for H2FY18 was 14.51%.

Consultancy business has contributed about 67% of the operating turnover and income from the consultancy has increased by 83% to Rs 292 crore in Q2 FY19 against the corresponding last quarter revenue of Rs 160 crore. Company's standalone Order Book stands at Rs 6183 crore as of 30.09.2018 which is expected to be executed in the next 1 to 3 years. This order book also includes export order book of Rs 1284 crore as on 30.09.2018. The present export order book is likely to be executed in 2 to 2.5 years time. As per delivery schedule Company will start exporting in the second half of FY19.