Indian economy’s growth estimates have seen a slump with estimates for FY25 and FY26 at 6.5 per cent and 6.7 per cent respectively, according to Care Edge Ratings. Inflationary pressures are easing, with CPI inflation projected at 4.8 per cent for FY25, supported by strong harvests and subdued global commodity prices. The current account deficit (CAD) is expected to remain manageable at 0.9 per cent of GDP.
According to Rajani Sinha, Chief Economist, CareEdge Ratings, “It is only the vegetable inflation that has spiked up the CPI numbers, if the same is excluded, Core Inflation stands at 4 per cent. Additionally, Rabi crop can bring about some moderation to the inflation.”
Here is how the sectoral outlook for FY25 looks like:
Pharma sees growth
The Indian pharmaceutical sector’s revenue is expected to increase by 9-10 per cent in FY25-FY26, reaching USD 65 billion by FY26. As per the Care Edge Ratings, recovery in the US generic market, coupled with easing input costs, has improved operating margins.
The industry’s focus on complex and specialty drugs, combined with opportunities from patent expiries, continues to fuel its growth trajectory.
Cement is expected to moderate
The cement industry’s growth is expected to moderate to 4-5 per cent in FY25, as demand remained flat in H1FY25. Capacity utilisation is projected to stay below 70 per cent, with fresh supply entering the market. Realisations are under pressure, with net sales revenue anticipated to decline by 2-3 per cent. The consolidation in the sector ensures that top players maintain dominance, contributing to over 63 per cent of total demand by FY26.
Automobiles
The two-wheeler segment is showing steady growth as per Care Edge Ratings, but passenger and commercial vehicles have entered a slower lane. EV penetration is increasing across segments, driven by rising consumer adoption and supportive policies. However, overall market expansion remains subdued, reflecting weaker demand fundamentals in key categories.
Steel
The steel sector faced challenges in H1FY25, with declining sales realizations due to higher imports and reduced exports. However, the outlook for H2FY25 is optimistic, supported by anticipated infrastructure growth. Secondary steel manufacturers are likely to experience more pressure on profitability compared to integrated players, as global headwinds persist.
Hospitality
The hospitality sector is witnessing strong growth, with pan-India branded hotel revenues expected to grow by 8-9 per cent in FY25. The sector continues to see higher demand than supply, with occupancy and RevPAR (Revenue Per Available Room) improving significantly.
Chemicals
Specialty chemicals remain resilient, supported by sustained demand across key end-user industries. Agrochemicals, on the other hand, are showing signs of recovery after a challenging FY24, with operating margins beginning to improve. The report says that the revival is accelerated by stable domestic demand and strategic initiatives by Indian players.
Infrastructure
Data Centres’ capacity is expected to double by 2027, driven by AI and the growing demand for cloud services. Investments in sustainability and operational efficiency are also enhancing sector prospects.
The airport sector is witnessing rapid growth, with passenger traffic projected to grow at twice the GDP rate in FY25. Tariff hikes and rising non-aero revenues are expected to boost profitability, while large-scale fleet additions will further augment capacity.
