November Newsletter
November 2023

From Chief Ratings Officer’s Desk

To share a snapshot of India's economic landscape in Q2 FY2024-The period showcased robust investment activity with year-on-year growth in key indicators, spurred by deficient rainfall in Aug 2023. Despite varied growth trajectories among indicators, capex-related ECB flows surged in H1 FY2024, surpassing full-year FY2023 levels.

Looking ahead, geopolitical tensions and potential government capex slowdown may temper investment demand in H2 FY2024. On a positive note, ICRA anticipates record-breaking passenger traffic of 373-380 million in FY2024, exceeding earlier estimates, driven by festive and holiday season travel. Major airports, developed under PPP, contribute significantly to this traffic, with aero revenues on track to recover to 107-110% of pre-Covid levels in FY2024.

The life insurance industry foresees substantial growth, with new business premiums expected to reach Rs. 4.06-4.14 trillion in FY2024. Operational savings and environmental consciousness are fueling the rise of electric buses, projected to constitute 11-13% of new bus sales by FY2025. As we navigate these economic dynamics, this newsletter provides insights into emerging trends, policy initiatives, and events shaping India's financial landscape.

The issue concludes with regular features, monthly rating updates, upcoming ICRA events, and news features related to the company.

I hope you will find this newsletter useful and interesting.

Best Regards

K. Ravichandran
Chief Ratings Officer, ICRA Ltd.

Neha Mittal

Neha Mittal

Assistant Vice President and Sector Head – Corporate Ratings, ICRA Limited

Residential launches to grow by 15% in FY2024, a decadal high

Vikram V

Vikram V

Vice President and Sector Head – Corporate Ratings ICRA Limited

ICRA's views on the Indian Solar Module OEMs

Sachin Sachdeva

Sachin Sachdeva

Vice President – Financial Sector Ratings, ICRA Limited

ICRA's views on the Indian Mortgage Finance Market

ICRA Research Updates
November 2023
Cement Sector: Cement volumes higher by 11% YoY in H1 FY2024
Corporate Sector: India Inc. maintains improved margin trajectory in Q2 FY2024 with festive period likely to aid further improvement
Economic Outlook & Macro Trends Sector: GDP growth pegged at healthy 7.0% in Q2 FY2024; likely to slow in H2 FY2024

Please click here to check out the video on the ICRA's Research Offerings.

ICRA in News
November 2023
The Indian Express, | 27th November

So Far So Consolidated

The Hindu Business Line | 28th November

By FY25, 11-13% of new bus sales expected to be electric: ICRA

The Economic Times | 8th November

No Big Bang Private Sector Capex for Next Few Years: ICRA

Upcoming Events
Watch this space for upcoming events
Aditi Nayar

Aditi Nayar

Chief Economist, Head-Research & Outreach, ICRA

FY2024 Investment demand to be cautious in H2 amid geopolitical tensions, run-up to General Elections

India’s investment activity was robust in Q2 FY2024, as reflected in the improvement in year-on-year (YoY) growth performance of majority of the investment-related indicators relative to Q1 FY2024, partly benefitting from the deficient rainfall in Aug 2023. While the YoY growth of seven of the 11 indicators improved in Q2 FY2024, the extent of improvement was limited, for indicators such as exports and imports of engineering goods, output of capital goods, consumption of finished steel, etc. Even as the YoY growth in the other four indicators weakened in Q2 FY2024 relative to Q1 FY2024, all of them continued to exhibit a double-digit expansion in that quarter. Moreover, capex-related ECB flows surged in H1 FY2024, exceeding the full-year FY2023 levels, auguring well for investment demand in the near term.

Jayanta Roy

Vinay Kumar G

Airport Infrastructure Sector
Vice-President and Sector Head - Corporate Sector Ratings, ICRA

Overall passenger traffic to touch record highs of 373-380 million in FY2024

ICRA expects the overall passenger traffic to touch record highs of 373-380 million in FY2024, translating into a YoY growth of 14-16% over FY2023. This is higher than ICRA’s earlier estimate of 12-14%. Further, the upcoming festive and holiday season is likely to drive passenger growth over the next 4-5 months. ICRA, therefore, maintains a ‘Stable’ outlook on the Indian airport infrastructure sector.

Neha Parikh

Neha Parikh

Life Insurance Sector
Vice President & Sector Head – Financial Sector Ratings, ICRA

Private insurers demonstrate resilience in business growth despite taxation changes

ICRA expects the life insurance industry’s new business premium (NBP) to grow to Rs. 4.06 4.14 trillion in FY2024 and Rs. 4.49-4.66 trillion in FY2025, up from Rs. 3.71 trillion in FY2023, translating into an industry-wide NBP growth of 9-12% for FY2024 and 11-13% for FY2025 respectively. With steady growth in renewal premium income, the gross premium written (GPW) is expected to increase to Rs. 8.56-8.64 trillion in FY2024 and Rs. 9.37-9.55 trillion in FY2025, from Rs. 7.86 trillion in FY2023E.

Kinjal Shah

Kinjal Shah

Commercial Vehicles Sector
Vice President and Co-Group Head, Corporate Ratings, ICRA

E-buses to continue to be on fast track; to account for 11-13% of new bus sales by FY2025

ICRA foresees electric buses (e-buses) to be at the forefront of India’s electrification drive, with the segment expected to witness healthy traction going forward. ICRA estimates e-buses to account for 11-13% of new bus sales by FY2025. The traction in the e-bus segment is already visible over the past couple of years, with e-bus volumes as well as penetration levels improving consistently, to 7% in FY2023. Steady progress has been made over this period towards meeting the e-bus deployment targets under the Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME) scheme, and this is likely to gain pace over the coming months, till the scheme expires in March 2024. Additionally, many state electric vehicle (EV) policies have announced specific targets and timelines for e-bus adoption, thereby creating a roadmap for electrification.

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