India Inc Revenue Growth At 16-quarter Low Of 5-7% In July-Sep
India Inc’s profitability is estimated to have improved 70-90 basis points (bps) on-year during the quarter
Marking the slowest pace in the last 16 quarters, India Inc is estimated to have clocked a slower revenue growth of 5 to 7 per cent on a year-on-year basis for the three months ended September (July- September), as per a report by Crisil. The dip has been attributed to stagnant performance in the construction vertical, which accounts for a fifth of India Inc's revenue, besides a decline in the industrial commodities vertical and subdued growth in investment-linked sectors.
India Inc’s profitability is estimated to have improved 70-90 basis points (bps) on-year during the quarter. The overall earnings before interest, tax, depreciation, and amortisation (Ebitda) for around 435 companies grew nearly 10 per cent on-year.
The cement sector’s revenue growth also slipped 2-3 per cent on a high base of the corresponding quarter last year and lower realisations due to weak prices. The agriculture sector saw a 20-22 per cent drop in revenue due to fall in raw material prices.
“Revenue of industrial commodities, investment and construction-linked sectors—collectively accounting for ~38 per cent of our sample set—grew only 1 per cent, weighing down overall performance. The industrial commodities sector, such as coal, saw a 6-7 per cent revenue decline due to lower coal offtake, coal-based power generation and e-auction premiums,” stated Pushan Sharma, Director-Research, Crisil Market Intelligence and Analytics.
On a positive note, the exports segment grew ~5 per cent. In this space, the pharmaceutical sector maintained its momentum with 11 per cent revenue growth, driven by strong demand in regulated markets and easing of pricing pressure in the US. Information Technology (IT) services experienced a more modest growth of 3-4 per cent, as clients in the banking and financial services sectors in North America and Europe deferred non-essential projects.
As per Crisil, for IT companies, Ebitda margin expanded 110-130 bps due to higher employee utilisation and lower attrition rates. In pharma, topline growth and lower raw material costs led to margin expansion of 320-340 bps for formulation players. This data is based on our analysis of 435 companies that account for almost half of the listed market capitalisation.
