Q3 FY25 Sees Growth Acceleration, India's Medium-Term Prospects Remain Promising: Analysis

Mumbai, Jan 8 (NationPress) The Indian economy is displaying early signs of a growth resurgence as rural demand is bouncing back due to a favorable monsoon season, which has outperformed the long-term average by 8 percent, as per a report released on Wednesday.

The BJP-led NDA government has regained its momentum, and recent victories in state elections and bye-elections have paved the way for a renewed emphasis on developmental initiatives.

This could potentially lead to an increase in capital expenditures, according to the report from Motilal Oswal Financial Services (MOSL).

"The earnings trajectory for Q3 FY25 is anticipated to mirror that of Q2 FY25, primarily propelled by the BFSI sector, alongside capital goods, technology, healthcare, and real estate," the report indicated.

It projects an 8 percent adjusted earnings growth for the BFSI universe, driven by insurance (+23 percent), PSBs (+13 percent), NBFC non-lending (+39 percent), NBFC lending (+8 percent), and private banks (+2 percent).

Significantly, the earnings of the capital goods sector are expected to increase by 26 percent YoY during this quarter.

"With FY25 being an election year, order inflows were projected to be subdued, but orders are expected to surge from Q4 FY25," stated the report.

Ordering activity has remained robust across thermal power, renewables, T&D, data centers, buildings, and factories, although it has been weaker in water and railways.

Furthermore, markets should remain vigilant regarding both the Union Budget and the RBI monetary policy.

The Union Budget will be a pivotal event, offering insights into a potential revival in government capital expenditure and initiatives to enhance consumption. Similarly, the RBI monetary policy in February will also be critical in shaping interest rate trends, as mentioned in the report.

Overall, "the medium-term opportunities for India remain promising," it concluded.