Post Conference Notes - Growth is Returning: Edelweiss PDF link

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We hosted 19 intermediaries across 11 key sectors at Edel Pulse 2014, our unique one-day investor forum meant to provide on-the-ground insights as well as to gauge the demand scenario. The conference was well received with 75 institutions participating leading to 380 meetings.

The overall mood was more upbeat than last year. The investment cycle is picking up, led by mid-size projects. Chemicals, auto components, textiles, defence and pharma segments are doing well. This should eventually flow into better materials (metals and cement) demand. The government is taking select steps to aid growth with diesel deregulation on the cards. Solar power and garmenting offer immense growth potential. In the BFSI space, mortgage finance demand is healthy with growth coming from tier 2/3 cities, while the MFI segment is normalising with stable delinquencies.

On the consumer front, H2FY15 is expected to see revival following better sentiment and urban recovery. Stable INR and lower crude prices are likely to boost margins of consumer companies. Media spends are robust with ~14-15% growth. Real estate remains region-specific with a weak NCR market offset by a stable Bengaluru market.

B2B: Revival on the cards; select steps by government to aid growth

The industrial/manufacturing part of the economy is witnessing pick up in the investment cycle, led by mid-size projects rather than mega projects. The government is taking select steps to aid growth including labour reforms, faster clearances, “MakeinIndia” initiative, improvement in PPP models and better partnership with the states. Knowledge-based industries such as speciality chemicals, pharma and auto components are leading the pick-up. Impact is expected to be visible in Q4FY15. Cement participants expressed confidence on ~8-8.5% p.a. demand growth. Oil & gas may see diesel deregulation soon. Solar power offers immense scope for growth (target capacity of ~100GW) across the value chain with potential for employment generation also. The domestic garmenting space is set for growth, driven by improving relative labour advantage over global competition.

B2C: H2FY15 expected to see pick-up; mortgage finance strong

Intermediaries in consumer segments indicated that after a sluggish H1FY15, H2FY15 is expected to be better, aided by improvement in sentiment, build up to festive season and urban recovery. Also, a stable INR and benign crude oil prices will boost margins of consumer companies. Ad spends in India are likely to grow by a healthy 14-15% YoY in FY15. In BFSI, mortgage finance demand is healthy with growth coming from tier 2/3 cities, while LAP products offer huge potential.  The MFI segment is returning to normalcy in terms of delinquencies. In realty, the NCR market remains weak with the expected Delhi master plan being a key monitorable, while Bengaluru remains stable with prices rising and the right products meeting strong demand.

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LINK
https://www.edelweiss.in/research/Edel-Pulse-Post-Conference-Notes--Growth-is-Returning/27172.html