Industrial capex slows, large companies save the blushes in FY21……but macro and micro triggers are setting the stage for capex recovery

We expect industrial capex to pick up, driven by:

• Conducive government support through policy measures such as the Production-Linked Incentive (PLI) scheme and reduced tax rates
• Accommodative monetary policies and lower interest rates
  
• Commodities upcycle, which has benefitted metal and cement players by repairing their balance sheets
  
• Rising merchandise exports
  
• Supply chain diversification
  
• Healthy balance sheets
  
• Global liquidity

The external environment for the capex cycle in the current decade will more likely resemble that seen in the first decade of the century (2000’s) in terms of global liquidity, monetary policies, liquidity, and healthy balance sheets.