ICRA

The ratings agency expects the sector to grow at around 15-17 per cent in 2021, against its earlier estimate of 15-20 per cent. "Patchy monsoons, together with price increase, against a backdrop of stagnant equipment rental yields, have impacted customer sentiments and in turn the volume," said Mayank Agrawal, Sector Head and Assistant Vice-President, Corporate Sector Ratings.

Collection efficiency, including overdue collection, for the most affected asset classes, viz microfinance and SME loans, reached close to 100 per cent for September 2021 from a low of 80 per cent seen in May 2021. Collections in the housing loan segment continued to remain healthy during Q2 FY2022, post swiftly recovering to pre-second wave level in June 2021.

An ICRA report has pointed out that the recovery was hastened by the easing of restrictions in Q2 FY2022. The ratings agency, though, did not change its negative outlook on the industry because it remains to be seen if the demand pickup can be sustained. A potential third wave and its impact on travel and hotel occupancies cannot be ruled out, according to the report.

According to Aditi Nayar, Chief Economist, ICRA: "With the further easing of the state-wise restrictions, especially across the southern states, the roots of the economic recovery deepened in July 2021. Despite a normalising base, eight of the 15 high frequency indicators recorded an encouraging improvement in their year-on-year (YoY) growth in July 2021."

"Over the past six years, given the multitude of policy and social/health disruptions, long steel demand grew at an anaemic 6-year CAGR (FY2016-2021) of 1.4 per cent. So far, available demand has been largely absorbed by the larger long steel manufacturers leading to a significantly divergent capacity utilisation trends between them and smaller long-steel manufacturers," said Jayanta Roy, Senior VP and Group Head at ICRA.

ICRA also expects the gross value added (GVA) at basic prices at constant 2011-12 prices at 17 per cent in Q1FY22. The ratings agency said that the trend has been supported by healthy Central and state government capital spending, robust merchandise exports and resilient demand from the farm sector. Muted base of last year's nationwide lockdown has aided in concealing the impact of the second wave of Covid-19.

According to the ratings agency, the growth on YoY basis was 132 per cent. Besides, the airlines' capacity deployment for July 2021 was around 90 per cent higher than July 2020. On a sequential basis, the agency said that the number of departures in July 2021 were higher by 49 per cent, as Covid-19 infections demonstrated a downward trajectory.

The agency in a note said that this trend is aided by a stable growth in both the original equipment manufacturer (OEM) and replacement segments. Accordingly, the note cited that growth will be aided by a sharp recovery in OEM tyre demand, lower base effect of FY2021, improving pace of vaccination, continued preference for personal mobility and healthy rural cash flows amid a normal monsoon forecast.