India's GDP Set to Grow by 6.7% in FY25, Leading Asia-Pacific: S&P Global
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Synopsis
An S&P Global Ratings report forecasts India's GDP will grow by 6.7% in FY25, making it the fastest-growing economy in Asia-Pacific. The report highlights the resilience of Indian firms and their ability to withstand economic pressures, backed by strong fundamentals and domestic focus.
Key Takeaways
- India's GDP projected to grow by 6.7% in FY25.
- Domestic focus reduces trade tariff risks.
- Indian firms can endure temporary earnings slowdowns.
- Renewable capacity to reach 500 GW by 2032.
- Steel, chemicals, and airports to see above-average growth.
New Delhi, March 20 (NationPress) A report from S&P Global Ratings released on Thursday forecasts that India's GDP will grow by 6.7% in fiscal year 2025 (ending March), positioning it as the fastest-growing economy in the Asia-Pacific region.
The report highlights that India's limited exposure to US markets helps mitigate trade tariff risks, and emphasizes that the country’s domestic focus and strong fundamentals provide resilience for Indian businesses.
According to the report, "Most of our rated Indian companies can endure temporary earnings slowdowns. Enhancements in operational and financial strength over recent years offer a buffer against such pressures. Additionally, businesses in India gain from a burgeoning economy, bolstered by robust infrastructure and consumer spending,” the report stated.
Furthermore, it indicated that Indian firms are safeguarded by substantial growth and enhanced credit quality, with many opting to fund onshore due to improved access to increasing liquidity.
Industries heavily reliant on US markets include IT services, chemicals, and automobiles. While services escape tariffs, some firms in the automotive sector, like Tata Motors Ltd. through Jaguar Land Rover Automotive PLC (JLR), have considerable US exposure.
The report also mentioned that India aims to boost its renewable energy capacity to a remarkable 500 gigawatts (GW) by 2032, up from approximately 200 GW at present.
“There is significant investment anticipated in the transmission sector. The Power Grid Corp. of India Ltd. is expected to double its capital expenditure to over INR 300 billion annually for the next few years,” it added.
The report anticipates the median revenue and EBITDA growth of its rated companies to approach nearly 8% in fiscal 2025, marking the fifth consecutive year of such growth. The steel, chemicals, and airport sectors are expected to experience above-average EBITDA growth.
In our base case, steel producers are likely to benefit from a slight decrease in input prices and a significant rise in volumes due to recent capacity expansions, although product prices may remain stable.
This assumes there is no impact on steel prices from trade diversions under US tariffs.
The chemicals sector is projected to continue its recovery following a downturn in 2024, the report stated.
"We foresee Indian companies predominantly funding onshore this year due to lower costs in domestic markets. Offshore routes, including dollar bonds, are still an option, but companies are expected to use these selectively," it noted, adding that years of credit improvements and healthy economic expansion further strengthen the resilience of rated firms.
