Revenue Growth for India Inc. Was 4-6% in Q4, the Slowest Since COVID-19: Crisil

According to a report by rating agency Crisil analysing 350 companies, India Inc. probably saw its slowest quarterly growth since the COVID-19 pandemic recovery started in September 2021, with revenue growth of 4-6 percent (excluding financial services and oil and gas sectors).

However, the deceleration has a greater foundation since it comes after years of increased development. Just 12 of the 47 industries that CRISIL tracks are anticipated to have improved revenue growth for the quarter, both sequentially and year over year, the research said.

It also said that the quarter’s top performers were probably consumer discretionary goods and services. The autos sector, which is comprised of discretionary items, had a robust gain in passenger vehicles due to increased volume and price increases over the previous year. Due to strong urban demand, the organized retail industry expanded for the twelfth consecutive quarter.

According to the research by Crisil, “MICE (meetings, incentives, conferences, exhibitions), weddings, and corporate travel segments rebounded, benefiting discretionary services, such as airlines and hotels.”

Conversely, it is possible that the growth in revenue from sectors related to construction was modest, mostly due to the high base of the fourth quarter of fiscal 2023, which saw construction businesses record their greatest quarterly revenue. In the cement industry, revenue growth was very modest throughout the quarter, despite a consistent demand trend due to increased supply and fierce competition.

“Corporate revenue is estimated to have grown nearly 8% in fiscal 2024, despite slower revenue growth in the March 2024 quarter,” said Miren Lodha, senior director of CRISIL MI&A Research. Revenue growth could go up to 9–10% in the 2025 fiscal year, mostly due to industries that serve the home market and are less reliant on commodities.

Notwithstanding a slowdown in the post-pandemic release of pent-up demand, consumer discretionary segments—which include both goods and services—will continue to expand. The resurgence of rural demand will accelerate growth in the consumer staples market, according to Lodha.

Regarding margin, a 100 basis point year-over-year increase is anticipated in the March quarter. Through the fiscal year 2024, the combined earnings before interest, tax, depreciation, and amortisation (Ebitda) margin for around 350 enterprises increased.

Export-oriented industries and consumer discretionary services most likely drove the increase in margin. Lower license fees, spectrum costs, and network opex, together with an increase in the number of subscribers and average revenue per user, contributed to telecom services’ increased margins in consumer discretionary services. Pharmaceuticals and information technology services, two industries reliant on exports, had their seventh consecutive quarter of profit growth.

On the other hand, because of import pressures that caused prices to drop, the steel industry, which is related to the construction industry, probably had an on-year fall in margin in the March quarter.

“Despite single-digit revenue growth, margin has increased on-year consistently for four quarters, indicating a shift in corporate focus towards profitability,” said Aniket Dani, director of CRISIL MI&A Research. In the fiscal year 2024, an estimated 150 basis points of improvement are anticipated. Commodity prices are probably going to be less erratic in fiscal 2025 as supply constraints lessen, which will assist India Inc. achieve an increase in Ebitda margin of 50–150 basis points.

He continued, pointing out that sectors comprising 52% of corporate India’s Ebitda, such as consumer staples, discretionary items, and industrial sectors, are anticipated to see the greatest rate of margin increase.

Related Articles

Back to top button