S&P Global joins the bandwagon to raise the FY25 GDP forecast for India to 6.8%, after the GDP numbers for the third quarter came in at an impressive 8.4%. That is an upgrade of 40 bps from its previous estimate of 6.4%. The Indian government agency, MOKSPI, has pegged its FY25 growth at 7.6%. S&P expects higher interest rates, controls on unsecured lending and lower fiscal deficit to hurt growth prospects next fiscal. However, at 6.8%, India will still be the fastest growing large economy, as China still struggles for growth.
There are some encouraging estimates about India’s full year current account deficit (CAD), after the third quarter CAD came in at $10.5 billion or 1.2% of GDP. In its latest macro update, Barclays has pegged full year current account deficit at $35 billion or just under 1% of GDP. That is an accretion of just $4 billion in the fourth quarter. For January and February, the combined overall deficit was just around $3 billion, so March 2024 could again see the services surplus fully offsetting the merchandise trade deficit or almost.
Bank of India board approved the raising of Rs10,000 crore through long-term infrastructure bonds to fund infrastructure projects. It is possible to raise funding through infrastructure bonds at lower rates of interest, but subject to the entire funds being applied to lending for infrastructure projects only. Recently, SBI had also issued infrastructure bonds to tie in funds that would be solely dedicated to lending to various infrastructure development projects. The bonds fund roads, bridges, airports, and telecom networks etc.
Wednesday saw smart gains for Reliance Industries. It gained 3.6% to Rs2,988 after Goldman Sachs raised its target price for RIL to Rs3,400. Goldman cited favourable risk-reward ratio and peaking capex leading to value accretion. The base case scenario has 14% upside. Goldman also gave a bull-case scenario where the stock could rally by 56% to Rs4,495 per share. The stock is now very close to its all-time high price of Rs3,025 per share. Retail and telecom capex is likely to taper, even as new energy capex is likely to surge.
Central government has put out its H1 debt raising schedule, pegging the amount at Rs7.50 trillion via market borrowings up to September 2024. This will be used to fund the revenue gap to push GDP growth. The full year market borrowing target is Rs14.13 trillion of which 53% will be completed in the first half of the fiscal. The full year target is lower than the gross borrowing estimate of Rs15.43 trillion for FY24, which was an all-time record. The amount of Rs14.13 trillion only refers to dated securities and not treasury bills.
Raymond Ltd, part of the Gautam Singhania group, has already turned zero-debt by monetizing its assets in recent quarters. Now the company looks to expand across its 3 major verticals; starting with apparels business. Later, the company plans to invest in the expansion of the other verticals; engineering and real estate too. This was confirmed by group CFO, Amit Agarwal. In the next 3 years, Raymond plans to add another 500 stores to take stores count to 2,000 pan-India. Its brands include Park Avenue and ColorPlus.
Hexaware Technologies, which had delisted from the stock markets, now plans to enter the stock markets once again. The company has laid out mega IPO plans and the size of the IPO is likely to be the largest since the LIC IPO. It is yet to specify the timeline and size of the IPO. Carlyle group will look to exit its stake in Hexaware through an offer for sale on Hexaware. However, it may also do away with the IPO and look at a private deal. The IPO, if it happens, could be worth $1 billion at an enterprise valuation of $4 billion.
If there is one story that is dominating the Chennai realty market, it is the Global Capacity Centres (GCC) focused transactions. This sector has set the commercial real estate market abuzz in Chennai. Year 2023 saw a surge in GCC-oriented office deals totalling 6.02 million SFT across 71 deals. That is full 176% higher yoy. Chennai nearly accounted for 29% of all GCC transactions in India. Even within the GCC space, it is the BFSI space that is dominating the GCC-oriented office deals; accounting for 30% of total GCC deals.