Capex announcements in Apr-Sep fell 32 per cent on year: Nirmal Bang Equities

The private sector and central and state governments announced capital expenditure totalling Rs 8.6 lakh crore in Apr-Sep, down 32 per cent from the same period last year, Nirmal Bang Institutional Equities said in a report.

This was due to a 21 per cent fall in capex announcements by the central government and nearly 34 per cent lower announcements by the private sector.
 
In the first half of this financial year, the private sector announced capital expenditure of Rs 6.11 lakh crore, central government announced capex of Rs 1.86 lakh crore, and the state governments Rs 65,300 crore. Share of the private sector in the total capital expenditure announcements was 71 per cent, slightly lower than 73.4 per cent in the same period last year.
 
Capital expenditure announcements, excluding air transport, during Apr-Sep by the private sector were up 18 per cent on year from Rs 5.1 lakh crore. Capital expenditure on renewable energy accounted for 17 per cent of the total projects by value, housing sector 14 per cent, and chemical sector 13 per cent, which was significantly lower from the peak of 35 per cent.

Of the total projects, the capital expenditure announced for the automobile sector was 12 per cent, an all-time high.

The capital expenditure announcements for several sectors such as housing, automobile, commercial complexes, and hotels were the highest, the broking firm said. In the case of the automobile sector, production-linked incentive schemes and investments in electric as well as hybrid vehicles supported the all-time high capital expenditure announcements.

Housing project announcements were at a peak and primarily comprised of projects in metropolitan and tier-I cities. This was due to the culmination of the real estate upcycle, which focussed on the luxury and upscale segment, the brokerage said.

In the first half of FY25, capital expenditure announcements by the central government, especially by central public sector undertakings, were down 21.4 per cent on year, but those by the National Highways Authority of India grew 174 per cent.

Announcements for railway projects saw a sharp fall of 88.5 per cent on year, while announcements for renewable energy were almost zero, and the state government project announcements declined 34 per cent, the brokerage said.

Road transport projects led the state government announcements and accounted for 58 per cent of the total, followed by water supply and sanitation projects accounting 11 per cent share.