Revenue growth of Indian industries is likely to slow to 5.4% in January to March 2023-24, the third slowest quarterly growth since the recovery from the Covid-19 pandemic in September 2021, a CRISIL study said.
Revenue growth stood at 7.9% in the December quarter of FY24 and 10.6% in March 2023.
However, this softening comes after strong growth in previous years and is, therefore, on a high base. Only 12 of the 47 sectors monitored by CRISIL are expected to improve sequentially and year-on-year revenue growth for the quarter. The analysis is based on 350 companies (except financial services and oil and gas sectors).
Crisil said consumer optional products and services led the show in the quarter. Among optional products, the automobile sector was boosted by healthy growth in passenger vehicles led by higher volumes and price increases in the past year.
Organized retail sector grew for the thirteenth consecutive quarter due to healthy urban demand. It said discretionary services, such as airlines and hotels, benefited from MICE1, with the weddings and corporate travel sectors picking up.
CRISIL said that “At the other end, revenues from construction-related sectors are likely to grow at a slower pace, essentially due to the high base of Q4FY23, in which construction companies achieved their highest quarterly revenues,”. Rating firm said: In the cement sector, despite steady demand momentum during the quarter, revenue growth remained moderate as prices came under pressure amid higher supply and intense competition.
“Even with slow revenue growth in the March quarter, corporate revenues are projected to grow 8 percent in fiscal 2024. In fiscal 2025, revenue growth should improve to 9-10%, driven by less commodity-dependent sectors and larger scale of fulfillment. Domestic market,” said Miren Lodha, senior director, CRISIL MI&A Research.
Despite single-digit revenue increase, margins have increased year-on-year for four repeated quarters, representing a shift in corporate focus toward productivity. An annual improvement of 150 bps is approximate for FY 2024.
As supply pressures ease, commodity prices are likely to become less volatile in FY2025, allowing Indian industrialists to register a 50-150 bps improvement in EBITDA (earnings before interest, taxes, depreciation and amortization) margins will get permission.
Aniket Dani, director of CRISIL MI&A Research, said sectors like consumer goods, discretionary products and industrials, which make up 52 per cent of corporate India’s Ebitda, are expected to see the highest margin expansion.
