Resurgence in business confidence: IMA’s BCPI Q1 FY25 signals optimism amidst nuanced trends

IMA India recently conducted quarterly Business Confidence and Performance Index (BCPI) survey, gathering insights from CEOs and CFOs.

In India’s evolving economic narrative, the latest findings from the BCPI reveals a mixed bag of trends and projections. As the BCPI for Q1 FY25 shows a noteworthy improvement, registering an impressive increase of approximately 3 points from January to reach 65.2 in April, it indicates a resurgence in business confidence and a positive macroeconomic outlook.

The optimistic macroeconomic index, which witnessed a substantial 6.8-point leap, reaching 65.9, is largely responsible for the recent uptick in BCPI. Nearly half of the respondents anticipate a near-term improvement in on-the-ground economic conditions, which is reflected in the upswing.

However, beneath this veneer of optimism lie subtle variations within business performance parameters. Even if hiring intentions are slightly higher than they were in the previous quarter of FY24, other metrics such as sales growth, new orders, profitability, and capacity utilization, are eclipsed by a relative decline. Nonetheless, the slowdown in capital expenditure observed in Q4 is expected to reverse in the current quarter, indicating a possible uptick in investment activity.

A sector-wise analysis reveals a predominantly positive outlook, with improvements anticipated in five out of seven sectors, with chemicals, automotive, and industrials leading the way. Notably, services companies have once again inched past manufacturing enterprises, albeit marginally, after a notable decline in the previous quarter.

There is also a shift in the spending patterns. The April-June quarter is likely to witness a sharp acceleration in advertising, travel, and team-building exercises. 

B2B companies report that their strongest end-demand is coming from BFSI, automotive, and general service sectors and the weakest from consumer goods and IT/ITes. 

It’s very interesting to note that B2C companies anticipate robust demand not just in tier 1, 2, and 3 cities, but also in semi-urban and rural markets this time, signaling a potential resurgence of growth in these previously overlooked regions.

Although there is a noticeable optimism in the Q1 FY25 BCPI fueled by a positive macroeconomic outlook, the underlying nuances highlight the need for a discerning approach.