India’s GDP bettered expectations beyond the normal as the Q3 GDP estimate came in at 8.4% while the full year GDP estimates for FY24 came in at 7.6%. In the third quarter, agriculture saw com pression in growth, but that was more than made up by robust performance put up by manufacturing and mining, apart from construction. While the FY24 GDP estimate was revised higher from 7.3% to 7.6%, the final estimate for FY23 GDP growth was revised down from 7.2% to 7.0%. Momentum appears to be strong.
Cabinet approved Rs1.26 trillion of investments in 3 semiconductor plants,. This includes the proposed Tata group’s chip fabrication facility at Dholera in Gujarat. The cabinet also cleared another project by the Tatas in Assam and the third project by CG Power in Sanand, Gujarat. Tata chip plant in Dholera will be in partnership with PSMC, Taiwan. CG Power will set up the plant in partnership with Renesas of Japan, and Stars Microelectronics of Thailand. The latter has a focus on very specialized chips to cater to niche uses.
The EBITDA of the Adani Group for the 12 months to December 2023 was up 34% at Rs78,823 crore. This marks a 2.5-fold growth in EBITDA over 2021. This refers to the EBITDA across all businesses of the Adani group. Nearly 85% of the EBITDA was generated by the core infrastructure platform of the group, which saw growth at 35.5% yoy. Its net debt is around 2.5X of EBITDA, which is fairly comfortable, while the gross assets to net debt also stands at 2.5X. The group has cash stash of Rs44,572 crore for liquidity needs.
India’s core sector output for January 2024 came in lower at 3.6%, but it must be noted that the December 2023 core sector number was upgraded by 106 basis points to 4.88% as part of the first revision. This is the lowest level in the last 15 months and is largely due to the base effect. Refinery products and fertilizes recorded negative growth while the other six sectors posted positive growth. The growth in core sector was led by coal, electricity, and steel. The high frequency growth in core sector was also robust at 2.2%.
The Supreme Court has dismissed the plea by Vedanta seeking the reopening of its Sterlite copper smelter plant in Tuticorin in Tamil Nadu, which has been shut for the last 4 years, after violence broke out at the plant leading to firing by the police and casualties. Court has refused permission keeping in mind the logic of sustainable development and health and welfare of residents in the area, despite the positive economic implications of the plant functioning. SC found several lapses in environmental safety norms at Vedanta.
The updated fiscal deficit of the central government as of the close of January 2024 stood at 63.6%, which is lower than 67.8% of the target in the year-ago period. The government has gone slow on spending in 2024 to keep the fiscal deficit in check at 5.8% of GDP in FY24 and at 5.1% of GDP in FY25. Net tax flows in the first 10 months were up 11.5%. In the year, the revenues got a big boost from the RBI dividend to the central government as well as the asset monetization of mines and roads doing better than expected.
Coal India and BHEL announced a JV agreement to set up an ammonium nitrate plant as part of its coal gasification project. The JV will trigger the “coal to chemicals” workflows by setting up a 2,000 tonnes per day (TPD) ammonium nitrate plant. JV will use the Pressurized Fluidized Bed Gasification technology developed by BHEL. While Coal India will own 51% of the JV, the remaining 49% will be held by BHEL. The annual production is slated at 6.60 lakh tonnes for which 1.3 million tonnes of coal will be supplied by CIL.
According to a report by CRISIL, the growing might of OTT is likely to hit the revenue of multiplexes hard. In fact, the revenue growth for multiplexes is expected to slow down to 10-15% in FY25 from 20-24% in FY24. The multiplexes are facing tough competition from the likes of Netflix and Amazon Prime and with Reliance-Disney also in the fray, it is just going to get a lot tougher. Operating margins are expected to grow from 14% to 15% in FY25. In pre-pandemic period, operating margins were in the range of 18-20%.