Will India see an pick-up in investment cycle now?
MUMBAI: India may soon see a pick-up in investments as the country, stuck with infrastructure bottlenecks, may have to spend more on building roads, power transmission and generating green energy, moves that are aimed at spurring the economic growth.
“Investments are largely happening in three sectors,” said Rakesh Singh, group head for investment banking, capital and commodity markets, HDFC Bank. “First, it is the transmission sector. Second is the roads sector, both under hybrid annuity model (HAM) and EPC model. The third is capital expenditure in renewable power - solar and wind power.”
On the road side, the government is trying to speed up a lot of things. Many banks are syndicating and participating in financial closure of four HAM projects, which are expected to roll out in big numbers. Significant capex is happening in this space, dealers said.
“Investment will continue to be in largely in infrastructure across the country,” said Singh.
However, all is not well. Sectors including cement, steel may take time to see the light of the day. The cement sector is also operating at 55-60% capacity in the south and a little higher in other parts of India. The steel sector will take time to undertake any capex or expansion.
“Brownfield projects are coming up in the cement sector but no greenfield projects yet. Capex is also needed in the office space and warehousing sector,” said Singh.
Moreover, investment in metal will be calculated, not massive. Investment in building materials will progress but in a measured pace.
“We see more consolidation in these two domains as weaker players may sell and move on,” he said.
Global research firm Nomura expects India's economic growth to remain muted at 5.7% in January-March quarter period this year amid subdued economic activity.
“We expect growth to remain subdued in the first quarter of 2017 as the activity level remains below its recent peak," Sonal Varma chief India economist at Nomura said in a research note.
“Investments are largely happening in three sectors,” said Rakesh Singh, group head for investment banking, capital and commodity markets, HDFC Bank. “First, it is the transmission sector. Second is the roads sector, both under hybrid annuity model (HAM) and EPC model. The third is capital expenditure in renewable power - solar and wind power.”
On the road side, the government is trying to speed up a lot of things. Many banks are syndicating and participating in financial closure of four HAM projects, which are expected to roll out in big numbers. Significant capex is happening in this space, dealers said.
“Investment will continue to be in largely in infrastructure across the country,” said Singh.
However, all is not well. Sectors including cement, steel may take time to see the light of the day. The cement sector is also operating at 55-60% capacity in the south and a little higher in other parts of India. The steel sector will take time to undertake any capex or expansion.
“Brownfield projects are coming up in the cement sector but no greenfield projects yet. Capex is also needed in the office space and warehousing sector,” said Singh.
Moreover, investment in metal will be calculated, not massive. Investment in building materials will progress but in a measured pace.
“We see more consolidation in these two domains as weaker players may sell and move on,” he said.
Global research firm Nomura expects India's economic growth to remain muted at 5.7% in January-March quarter period this year amid subdued economic activity.
“We expect growth to remain subdued in the first quarter of 2017 as the activity level remains below its recent peak," Sonal Varma chief India economist at Nomura said in a research note.
