India's economic growth in Q2 FY24 has faced several challenges, including the global economic slowdown, insufficient rainfall, and a decrease in government capital expenditure [4ef77a15]. Despite these challenges, services remain the largest contributor to growth in Q2, although slower growth is expected in certain sectors [4ef77a15]. Analysts caution about potential risks to India's growth momentum, such as a slowdown in the US, lower reservoir levels, volatile food inflation, and uncertainty around elections [4ef77a15]. However, they also highlight the resilience of the domestic banking system [4ef77a15].
Barclays forecasts a GDP growth rate of 6.3% for FY23-24, with upside risks stemming from strong consumption demand [4ef77a15]. SBI Research expects Q2 FY24 GDP growth to be in the range of 6.9% to 7.1%, pushing the overall growth rate for FY24 above the Reserve Bank of India's projections [4ef77a15]. ICRA estimates that Q2 GVA growth will ease to 6.8% from 7.8% in Q1, driven by the services sector and agriculture [4ef77a15].
Goldman Sachs predicts that India's GDP growth will moderate slightly to 6.3% in 2024, with subsidies and transfer payments driving growth in the first half of the year due to the general elections, and investment growth re-accelerating in the second half [a51e9f9b]. Inflation is forecasted to decline to 5.1% in 2024, above the Reserve Bank of India's target of 4.0%, while core inflation is expected to decline to 4.5% [a51e9f9b]. The report predicts that the RBI will cut interest rates by 50 basis points to 6.00% by early 2025 [a51e9f9b].
Looking ahead, India's GDP growth is expected to be powered by both government spending and private sector investment, with Goldman Sachs predicting a 6.5% growth rate for FY25 [2d16b929]. Other agencies also support this balanced approach to growth [2d16b929]. Inflation is projected to average 5.1% in CY23, and the government is expected to intervene to control food inflation [2d16b929]. The RBI is projected to maintain interest rates until Q4 2024, followed by a 50 basis points rate cut by early 2025 [2d16b929]. India's economy is relatively less sensitive to external shocks, providing some stability, and corporate profits are expected to grow in the coming years [2d16b929].
The slower-than-expected GDP growth in India poses challenges for the government's spending plans, as the negative wholesale price index (WPI)-based inflation suggests that the GDP growth rate without adjusting for inflation may be below budget estimates [2473b924]. This could result in the need to reprioritize spending to ensure funds flow to high-priority items and achieve the fiscal deficit target [2473b924]. Experts anticipate that the nominal GDP growth rate may be lower than budgeted due to constraints in real GDP growth and inflation [2473b924]. Tax revenue collection may also fall short of budgeted amounts, leading to a potential shortfall in overall revenue receipts [2473b924]. However, experts believe that the slippage in fiscal deficit may be negligible, and the government will adjust the expenditure side to meet the target [2473b924].
Despite these challenges, the Ministry of Finance expects India's gross domestic product (GDP) growth for FY24 to be 6.5% [70c93cf3]. The government's sustained investment push, healthy corporate profits, and reduction in bank non-performing loans are expected to support strong investments [70c93cf3]. Private final consumption expenditure has been the strongest driver of growth so far, with the festival season further boosting consumption demand [70c93cf3]. The government is also on track to achieve the budgeted deficit target for the current financial year [70c93cf3]. The decline in US rate hike expectations, the slide in the US 10-year treasury yield, and the decline in oil prices are seen as good news for emerging markets, including India [70c93cf3]. The services sector, particularly the tourism and hotel industry, remains upbeat despite rising input costs [70c93cf3]. The Ministry of Finance is confident in achieving macroeconomic stability despite risks such as high inflation and uncertain external financial flows [70c93cf3].
Inflation remains a major concern for the Indian economy, prompting both the government and the Reserve Bank of India (RBI) to remain vigilant [90d4c082]. The report highlights the importance of monitoring financial flows in the external sector as they impact the value of the Indian rupee and the balance of payments [90d4c082]. It also mentions that the complete transmission of monetary policy could moderate domestic demand [90d4c082]. The report further discusses the benefits that emerging markets, including India, have experienced due to the reversal of rate hike expectations in the US, along with a decline in the US 10-year treasury yield and oil prices [90d4c082]. The report concludes by stating that the Indian economy has been resilient amid a global slowdown, driven by solid domestic demand and progress in the agriculture sector [90d4c082].
DHL, a global logistics company, is experiencing resilient growth in the Indian market, signaling optimism for 2024 [85cd2a30]. The company has seen momentum in the B2C sector and expects increased growth in 2024, with the B2B sector gaining momentum by Q1 [85cd2a30]. Despite slow global demand, DHL is optimistic about reducing inventory levels and seeing a return to growth in its B2B sector [85cd2a30]. The company has expanded service facilities and revamped its vehicle fleet in India [85cd2a30]. While there are short-term cyclical issues in traditional segments, DHL sees great promise in the Indian market [85cd2a30].
According to Varun Lohchab of HDFC Securities, the market upside in 2024 is expected to be limited despite healthy expected earnings growth of the index [0f1dfc7b]. Lohchab believes that DII and retail flows are expected to remain buoyant in the coming year [0f1dfc7b]. Varun Lohchab is the Head of Research - institutional equities at HDFC Securities [0f1dfc7b].
DHL Group, a global logistics company, has exceeded its 2023 targets despite the weak global economy [e5fffee4]. In 2023, DHL Group reported revenues of €81.8 billion, down from €94.4 billion in 2022, and a profit from operating activities (EBIT) of €6.3 billion, down from €8.4 billion in 2022 [e5fffee4]. However, both revenues and EBIT were significantly above pre-pandemic levels [e5fffee4]. DHL Group expects an operating profit of €6.0 to €6.6 billion for 2024 and €7.5 to €8.5 billion for 2026 [e5fffee4]. The company's comprehensive portfolio of logistics services helped offset the weak economic conditions and contributed to its better-than-expected performance [e5fffee4]. While volumes in DHL Express declined for the second year in a row, DHL Supply Chain's business grew [e5fffee4].
Delhivery, an integrated logistics services provider, reported a net loss of Rs 68.4 crore in the March 2024 quarter, compared to a net loss of Rs 158.6 crore in the same period last year [cf0b1269]. The company's revenue for the quarter increased to Rs 2,194.5 crore from Rs 1,934.2 crore a year ago [cf0b1269]. For the full fiscal year 2024, Delhivery's net loss declined to Rs 259.2 crore from Rs 1,007.7 crore in FY23 [cf0b1269]. The company's CEO, Sahil Barua, highlighted the company's improved profitability and completion of long-term capital investments [cf0b1269]. The board of directors also approved the incorporation of a wholly-owned subsidiary for manufacturing drones and freight air transport services [cf0b1269].
Prosus, the largest shareholder in Swiggy, reported a 24% revenue growth for the year ended March 31, 2024, with Swiggy's gross order value increasing by 26% year on year [a9225066]. Swiggy's core food delivery business gross order value grew by double digits on healthy order growth and higher average order value [a9225066]. Swiggy has filed confidentially for a $1.25 billion IPO and Prosus holds a 32.6% stake in the company [a9225066].
StubHub, a ticket resale platform, has decided to delay its planned US initial public offering (IPO) until after the summer due to soured market conditions [67812a2e]. The company had been expected to make its IPO filing public as early as Friday, but now the company will have to file updated financial information with the US Securities and Exchange Commission [67812a2e]. The IPO launch is now expected to be delayed until at least September [67812a2e]. StubHub produced $350 million in earnings before interest, taxes, depreciation, and amortization for the year ending in March [67812a2e]. The delay in the IPO is attributed to the current market volatility, and the company must be agile to meet changing market conditions and regulatory requirements [67812a2e].