Panorama – June 2024
Panorama June 2024 edition is out now!
Panorama is a meticulously crafted report that offers a comprehensive view of the macro factors and market trends shaping India’s economic landscape.
Here are the key insights from the report:
- In FY24, corporate earnings were driven by higher operating profit margins, while sales growth lagged. The manufacturing sector witnessed a steep recovery in Gross Value Added (GVA) due to the higher operating profit growth of listed manufacturers, attributable to a decline in raw material costs.
- Employee expenses growth for listed corporates moderated in FY24. The moderation was primarily due to a sharp decline in IT sector employee expenses growth resulting from a workforce reduction.
- The banking sector witnessed a moderation in net interest margins in FY24 due to an increase in the cost of deposits. Banks increased term deposit rates as competition intensified due to a high credit-to-deposit ratio. This increase also led to a shift away from low-cost current and savings accounts (CASA), further raising the cost of deposits for banks.
- Corporate debt sustainability improved with a fall in the debt-to-equity ratio and an improvement in the interest coverage ratio in FY24. The proportion of debt held by highly leveraged companies (debt-to-equity > 2) also fell in FY24, and that held by companies with an interest coverage ratio < 1 decreased.
- The private sector continued to ramp up investments in FY24. Investments have grown at a compound annual growth rate (CAGR) of 19% since FY21. Private investment momentum is expected to persist, supported by high asset turnover and capacity utilisation.
- Infrastructure outperformed consumption in terms of investment returns amid a shift towards investment-led growth. Weak consumption was evident in poor FMCG volume growth. However, the premiumisation trend persisted across categories, indicating a K-shaped recovery.
- Consumption growth is expected to recover to 6% YoY in FY25-26 from 4% in FY24. The rural sector is already displaying signs of recovery, and a well-distributed normal monsoon could further boost rural consumption. However, operating profit margins could face pressure due to higher metal prices.
