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State of Nation - CRISIL's new report

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CRISIL's new #stateofnation report is a unique top-down-meets-bottom-up analyis that spans the economy, industry, sectors and companies. The full report can be downloaded from this link: http://goo.gl/A0yEml

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State of Nation - CRISIL's new report

  1. 1. ©2013CRISILLtd.Allrightsreserved. State Of The Nation Economy . Sectors . Companies September 13, 2013 1
  2. 2. ©2013CRISILLtd.Allrightsreserved.  Wide coverage spanning more than 70 sectors.  Strong on-the-ground inputs through primary sourcing from over 4000 contacts  Ability to leverage upon cross- sectoral linkages CRISIL’s unique analysis combining macro and micro  Sound macroeconomic research and forecasting capabilities  Team of economists with decades of experience in bridging economics and real world  Comprehensive study of 2481 firms (rated ‘BBB-’ or higher) accounting for 32% of banking credit to corporates 82% of CRISIL-rated debt Two out of three sectors will experience lower revenue growth Demand slowdown, the biggest source of vulnerability, impacts nearly a fourth of 2481 firms Industry projected to grow at 1% in 2013-14 2
  3. 3. ©2013CRISILLtd.Allrightsreserved. Agriculture bounty 3 Boost for exports  Weak currency, pick up in advanced economies  IT-ITES, pharmaceuticals, textiles and leather likely to benefit  Helps in paring the trade and current account deficit Forex vulnerability is the least of the stress factors  Impacts only 6% of the 2,481 firms analysed  A caveat is in order: the universe of CRISIL-rated firms does not include many of the major debt-laden corporate groups The Good  Timely, well-distributed monsoons  Farm GDP growth to accelerate to 4.5% from last year's 1.9%  Check food inflation  Boost rural consumption  Stimulate demand for tractors and two-wheelers
  4. 4. ©2013CRISILLtd.Allrightsreserved.  Heavy burden of oil subsidies and declining growth in tax revenues will lead to slippages  Fiscal deficit likely to bloat to 5.2% of GDP, higher than budgeted 4.8% Inflation rising 4  Surging crude oil prices and weaker rupee to push WPI inflation beyond 6%  Rate cuts by RBI difficult  Stress in leveraged sectors such as infrastructure and real estate Services segment weak  Spill-over of slower industry growth due to increased linkages between industry and services  Services growth of 6.5% in 2013-14, compared to 10% in the last decade Firms stretched for liquidity  Liquidity pressures are a source of stress for 16% of the 2,481 companies analysed.  Large firms are impacted more acutely (27% of firms with operating income > Rs. 1000 crores affected) The Bad No scope for stimulus
  5. 5. ©2013CRISILLtd.Allrightsreserved. Demand slowdown hurts the most 5  Two out of three sectors will experience lower revenue growth  Vulnerability to demand slowdown remains the most important source of stress for 25% of 2481 firms analysed  Larger firms more challenged: higher indebtedness and stress on interest cover Industrial growth stays anemic  Industry will grow at a two-decade low of 1%  Investment climate weak  Infrastructure, capital goods, real estate, automobiles and transport operators likely to be the worst hit Current account deficit (CAD) will keep rupee weak  Rupee could rebound to 60/$ by March 2014, as CAD declines to 3.9%,  Currency to remain significantly depreciated compared with last fiscal – Upward pressure on inflation, fiscal deficit and input costs for corporates. The Ugly
  6. 6. ©2013CRISILLtd.Allrightsreserved. GDP growth at decadal low of 4.8% 6  If India gets lucky, and agriculture growth surges 6%, overall GDP could be a much better 5.2%  This happened in 2010-11 when, after a good monsoon, it had rocketed to 7.9% Economy will stay in an L-Shaped trajectory  Economy will stay in an L-Shaped trajectory through this fiscal unlike the V-shaped recovery seen after the Lehman crisis in 2008 What does this add up to
  7. 7. ©2013CRISILLtd.Allrightsreserved. CRISIL Limited www.crisil.com www.standardandpoors.com CRISIL Limited www.crisil.com www.standardandpoors.com

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