National Accounts Committee (NAC) released GDP estimates for 1QFY26, showing growth of 3.7% YoY, which isthe highest first quarter growth in 4 years and higher than the last 8 years’ average 1Q growth of 3.3%. While the committee has also revised up FY25 growth estimates marginally to 3.09% from earlier 3.04%.

The growth estimates of 1Q are higher than our expectations, mainly due to an 8-year high 1Q industrial growth of 9.4%, thanks to 25% growth in the electricity, gas, and water supply sectors and 21% growth in the construction sector.

Agriculture posted growth of 2.89% in 1QFY26 despite contraction in crops: Despite contraction in crops by 3.65%, the agriculture segment has managed to post growth of 2.89% backed by 6.3% growth in Livestock and 2.1% growth in Forestry.

In crops, important crops have declined 0.75% due to a decline in cotton production. Similarly, other crops have contracted 6.4%.

Topline analysts maintain our agriculture growth target of 3% for FY26, with crops growth target of 2.1%, livestock 3.5%, and forestry 3.0%.

Industry posted a massive increase of 9.4%: The Industrial segment increased by 9.4% in 1QFY26 compared to 0.12% in 1QFY25. The primary contributors to this increase is electricity, gas & water supply industry, which recorded a growth of 25.5% due to higher subsidies and a decline in the deflator. This is followed by an increase in construction sector growth of 21.03% due to higher production of cement and growth in LSM by 3.93%.

Analysts said that increase our industrial growth estimates from earlier 3.7% to 6.8% mainly due to an upward revision in the electricity, gas and water segment from 4% to 18%, as the 4Q of last year was significantly adjusted upward by 121%, which will continue to elevate 1Q, 2Q, and 3Q numbers for FY26 due to a low base. Furthermore, we have also increased construction growth estimates from earlier 8% to now 12% amidst better-than-expected cement offtake.ECC approves 0.3m wheat import from Russia

Services grew by 2.35%: The services sector has posted growth of 2.35%, primarily led by 10.4% and 8.08% growth in Finance & Insurance and Public admin & social security, respectively. At the same time, information & communication declined 29%, amidst a decline in cell phone production. We maintain our FY26 services growth assumption of 3.0%.

Topline analysts have revised up our FY26 GDP growth estimates from earlier 3-3.5% to a new 3.5-4.0%, mainly due to upward revision in industrial growth numbers, as mentioned above.