Q4FY21 GDP Growth Print confirms growth momentum witnessed since Q3FY21

Mr.Suman Chowdhury, Chief Analytical Officer, Acuité Ratings & Research on FY21/Q4FY21 GDP

"The GDP growth print for overall FY21 and Q4FY21 at -7.3% and 1.6% respectively is significantly consistent with our forecasts and confirms the growth momentum that had started to build in since Q3FY21. As expected, agriculture has recorded a healthy GVA growth of 3.6% in FY21 with all the other industrial and service sectors having witnessed significant contraction under the severe impact of Covid (only exception is the utility segment, primarily electricity supply). The contact intensive activities such as trade, hotels and transport have recorded a deep contraction of 18.2% given the disruptions and the demand disruption created by the pandemic.

What catches our attention, however, is the quarterly GVA print for Q4FY21. The manufacturing sector has delivered a 6.9%YoY growth in Q4 which despite the impact of the base factor, highlights the pickup in industrial activity. Further, the construction sector has recorded a growth of 14.5%YoY which in our opinion, indicates the effect of government capital expenditure. What is pleasantly surprising is that the financial, real estate and other services also recorded a healthy growth of 5.4% in Q4FY21. While the second wave of Covid is likely to impact these segments in Q1FY22, it is clear that removal of lockdowns and movement restrictions by June should help the economy pickup the lost growth momentum by Q2/Q3FY22 unless we see a threat of third wave etc. We, therefore, continue to hold our forecast of 10.0% GDP growth for FY22."

Source : Equity Bulls

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