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  • đź“°India's Core Sector Growth Slows, Blackstone Acquisition, India Invests in Oil Tanks

đź“°India's Core Sector Growth Slows, Blackstone Acquisition, India Invests in Oil Tanks

Three stories on Indian markets that you can't miss.

May 21, 2025

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Good afternoon, 

Welcome to the best way to stay up-to-date on India’s financial markets. Here’s what’s in today’s newsletter:

  • India's infrastructure output rose just 0.5 percent y-o-y in April,

  • India is spending $10 billion (â‚ą855.2 billion) to build a fleet of 112 crude oil tankers by 2040,

  • and Blackstone is leading the race to acquire AGS Health, a US-based healthcare revenue cycle management firm founded in India.

Then, we close with Gupshup, a round-up of the most important headlines.

Have a question you want us to answer? Fill out this form, and you could be featured in our newsletter.

—Shreyas, [email protected]

Market Update.

India’s Core Sector Growth Slows Sharply.

India's infrastructure output, a key gauge of economic activity across eight core sectors, rose just 0.5 percent y-o-y in April, marking its slowest pace in eight months, according to data released by the Ministry of Commerce & Industry. This is a sharp deceleration from the 4.6 percent growth recorded in March.

The eight core sectors, coal, crude oil, natural gas, refinery products, fertilizers, steel, cement, and electricity, account for 40 percent of the Index of Industrial Production (IIP), making this slowdown a potential indicator of weaker overall industrial activity in the country.

Sector breakdown: Cement grew at 6.7 percent, the fastest, but still down from 12.2 percent in the previous month. Steel only rose 3 percent, coal grew 3.5 percent (an improvement from before), and electricity slowed to 1 percent. Other energy sources like LNG barely moved at 0.4 percent, and crude oil actually retracted by 2.8 percent. Fertilizers and refinery products both contracted by around 4 percent. The cumulative core sector growth for FY25 so far stands at 4.5 percent, showing a positive trend compared to the same period last year.

Economic Context: Analysts point to a “high base effect” from April 2024, when core sector output grew 6.9 percent, and ongoing geopolitical tensions and trade uncertainties as key reasons behind the broad-based slowdown. Considering that the deceleration was broad-based and led by nearly every sector barring coal and natural gas, a slight slowdown due to trade uncertainty certainly leads to the explanation. This marks the largest sequential contraction (11.4 percent) in the index since April 2021, highlighting the fragility of the industrial recovery.

Implications: Given the weak core data, analysts expect IIP growth to fall to around 1 percent for April, compared to 3 percent in March. The government will release the official IIP numbers on May 28. Meanwhile, international institutions like the IMF and World Bank have lowered India’s 2025 GDP growth outlook to 6.2 percent and 6.3 percent, respectively, down from earlier projections of 6.5 percent, citing geopolitical uncertainties. With the Q4 (FY25) GDP data due on May 30, all eyes are on whether this core sector weakness will ripple into broader economic indicators.

India is Building Its Own Oil Tanker Fleet.

India is launching a major initiative to strengthen its energy security by spending $10 billion (₹855.2 billion) to build a fleet of 112 crude oil tankers by 2040. The move aims to reduce India’s reliance on foreign-owned vessels and boost the country’s nascent shipbuilding industry. The first phase of the plan involves the purchase of 79 ships, with an initial order for 10 tankers expected as early as this month. Notably, only locally built ships will be considered, even if they involve foreign collaboration, the sources said.

Why India needs to retool: India’s current oil shipping fleet is outdated and heavily dependent on chartered vessels from global companies. This initiative, driven by the shipping and petroleum ministries, is seen as a strategic push to ensure steady crude imports for the world’s third-largest oil importer, especially as domestic refining capacity is projected to nearly double to 450 million tons by the end of the decade.

The government has set ambitious targets to increase the share of locally built tankers in the national fleet from 5 percent now to 7 percent by 2030, and eventually to 69 percent by 2047 — aligning with India’s goal to become a developed nation by that year. To support this vision, Modi’s government has launched a $2.9 billion (₹250 billion) maritime fund to boost domestic shipbuilding. The country is also inviting foreign shipbuilders, especially from South Korea and Japan, to set up operations in India with incentives on offer. Companies in talks include HD Hyundai Heavy Industries, Samsung Heavy Industries, and Nippon Yusen KK.

Currently, India’s largest domestically built tanker, the MT Maharshi Parashuram, pales in comparison to global benchmarks like China’s Oceania supertanker. However, the government hopes that fostering local demand will attract international manufacturers and build economies of scale. The plan also encompasses future capacity for transporting coal, fertilizers, and steel, all of which are expected to eventually shift to India-built ships.

Reducing dependence: Experts view the strategy as a long-overdue step to reduce dependence on Chinese maritime services, enhance energy security, and stimulate the domestic shipbuilding ecosystem — a sector that has struggled to scale due to limited domestic orders.

Blackstone Nears Acquisition of AGS Health from EQT.

Blackstone is leading the race to acquire AGS Health, a US-based healthcare revenue cycle management firm founded in India, in a deal potentially valued at over $1 billion (â‚ą85.5 billion), according to insiders. The transaction would mark a significant exit for EQT, the Sweden-based private equity firm that inherited AGS Health through its 2022 acquisition of Baring Private Equity Asia, which initially bought AGS in 2019.

Talks are reportedly in the advanced stages, with a final agreement possible within days. However, insiders caution that the deal is not yet finalized, and negotiations could still fall apart. Both EQT and Blackstone declined to comment.

A short history: AGS Health, originally founded in Chennai in 2011, has grown into a major player in the outsourced medical billing and coding sector, primarily serving US hospitals and healthcare systems. The company moved its headquarters to Washington, D.C., and expanded to the Philippines in 2023. It now employs over 12,000 people across its global operations and supports more than 150 clients, according to its website.

Why Blackstone is interested: The deal underscores Blackstone’s continued appetite for healthcare-related assets, especially those that support back-end operations for US healthcare providers. If completed, the acquisition would further solidify Blackstone’s position in the healthcare IT and outsourcing space, an area with strong growth prospects fueled by rising administrative complexity and cost pressures in US healthcare.

The pending sale also highlights India’s growing role as a hub for healthcare business process outsourcing (BPO), particularly for North American clients. AGS’s scalable, cost-effective operations make it an attractive acquisition target for global private equity players looking to capitalize on digital transformation in healthcare.

Blackstone has been actively deploying capital in India and other emerging markets, while EQT continues to reshuffle its portfolio post its merger with Baring Private Equity Asia. The AGS deal, if closed at the rumored valuation, would represent a solid return for EQT and another strategic win for Blackstone in the healthcare sector.

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Gupshup.

Macro

  • Short-term bonds began to rally on hopes of a record RBI dividend. Borrowing costs dipped to a 3-year low, especially across shorter tenors, on the hope of a large dividend payout to the government. A larger transfer means fewer required government deficits, which will result in a slight decrease in the supply of government securities. The dividend is expected to be around $40 billion (â‚ą3.3 trillion), the largest ever. 

  • ​​Indian imports of Russian oil will hit a 10-month high. Supply chains are being thoroughly rebuilt after Biden’s last-minute sanctions. There are 10 cargoes on the way for June, which is near an all-time high of imported oil cargoes.  

Equities

Alts

Policy

See you Thursday.

Written by Yash Tibrewal. Edited by Shreyas Sinha.

Disclaimer: This is not financial advice or recommendation for any investment. The Content is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice.