Mumbai: There has been a significant increase in capital expenditure in India, with growth expected to continue in the coming months as several sectors witnessing strong investments, according to a new report by global brokerage Jefferies.
Mahesh Nandurkar, the head of research and managing director at Jefferies, expects capital expenditure growth to remain robust in February and March.
This aligns with the government’s revised budget estimates, indicating a continued push for infrastructure and industrial development.
“These are on expected lines but the fact that it’s happening, gives confidence,” said Nandurkar.
He added that next year’s numbers, about 10 per cent or so, could be lower if there’s revenue short fall, “which I think is likely”.
“A lot will depend on whether the government kind of upfronts the capex and if it continues,” Nandurkar stated.
The central government’s capital expenditure rose by 51 per cent year-on-year in January 2025, reflecting its commitment to strengthening the country’s infrastructure.
The government’s focus on railways and road projects has helped achieve significant progress, with around 83-87 per cent of the financial year 2025 revised estimates already completed for these sectors.
Nandurkar said that one needs to take a more of a calibrated approach. The market is cautious on private capex.
“I believe that private capex is already happening in sectors like cement, steel, hospital and real estate,” he added.
The government’s commitment to capital expenditure remains strong, with transfers to states rising by approximately 60 per cent.
This financial support is expected to further accelerate infrastructure projects at the state level, boosting overall economic growth.
Jefferies also highlighted strong growth potential in key sectors. One of them was metal stocks, highlighting strong momentum in the sector.
The brokerage also pointed out that the Asian steel spread remains 20 per cent below its long-term average, leaving room for potential expansion.
Additionally, Indian steel prices have risen by 5 per cent from their December lows, signaling a recovery in the sector.
Jefferies further stated that any potential safeguard duty on steel could provide additional support to prices, improving margins and boosting valuations for metal companies.
With improving fundamentals and favourable market conditions, the metal sector is expected to continue its strong performance in the coming months, the brokerage firm stated.
(IANS)
