New Delhi, March 4 : Private consumption demand, which forms the largest part of GDP, slowed meaningfully to 2.1 pert cent in Q3FY23 due to slowdown in urban discretionary consumption along with already weak rural demand, Ambit Capital said in a report.

Manufacturing sector contracted for a second straight quarter as demand for manufacturing exports decelerated given the global slowdown.

Real GDP growth in FY24 will be in the range of 5.5-6 per cent (vs 7 per cent in FY23), with downside risks, given: (1) urban discretionary demand continues to decelerate along with weak rural demand, (2) private investment remains in the slow lane given rising borrowing costs and sluggish external demand and (3) slowdown in global growth will adversely affect India’s manufacturing and services exports, Ambit Capital said.

Systematix Institutional Equities in a report said that on the discretionary front, growth remains sluggish, especially in apparel and QSR, prolonging the deceleration that started post festive season. This could be a temporary slowdown, but if it continues for few more months, it could impede the footprint expansion plans of most industry players.

“Margins could pose a concern, as the recovery is being driven by promotions, discounts and higher sales of entry-level products. While the medium-term narrative on discretionary remains strong, we foresee more earnings cuts in FY24, especially on the margin front, which could drive some more de-rating in the space and amplify the recent underperformance. While we expect near term sluggish growth in QSR and apparel, paints, jewellery and luggage may fare relatively better,” the report said.

In consumer discretionary, there was no major change in the demand environment across categories in February, which remained sluggish in QSR, apparel and jewellery segments.