India Inc’s revenue growth weakest since Sept 2021: Crisil Report

The average revenue of India Inc is estimated to have grown just 4-6% in January-March 2024 quarter (Q4FY24), the slowest quarterly expansion since recovery from the Covid-19 pandemic began in September 2021, ratings agency CRISIL said in a report on Monday.

The moderation, though, follows stronger growth in previous years and is, hence, on a higher base. Among the 47 sectors monitored by CRISIL, only 12 are expected to have clocked an improvement in revenue growth.

Looking ahead, in the current fiscal year (FY24), revenue growth should improve to 9-10%, driven by sectors less dependent on commodities and largely catering to the domestic market, the agency said.

In Q4, revenue from construction-linked sectors likely grew at a tepid pace, essentially on account of a high base of the fourth quarter of fiscal year 2022-23 that saw construction companies achieving their highest quarterly revenue. In the cement sector, despite steady demand momentum during the quarter, revenue growth remained moderate as prices were under pressure amid higher supply and intense competition.

"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 at CRISIL Market Intelligence & Analytics.

The report is based on an analysis of 350 companies. It excludes financial services and oil and gas sectors.

On the margin front, an improvement of 100 basis points (1%) is estimated in Q4 year-on-year. Overall earnings before interest, tax, depreciation and amortisation (Ebitda) margin for the surveyed companies continued to expand through FY24.

Consumer discretionary services and export-linked sectors likely led the margin expansion. In consumer discretionary services, margins for telecom services rose on account of lower licence fee, spectrum charges and network operating expenses, alongside increasing subscriber base and average revenue per user.

Information technology services and pharmaceuticals—both dependent on exports—clocked their fifth straight quarter of margin expansion. Conversely, the steel sector, a construction-linked commodity, likely logged a decline in margin in the March quarter as import pressures led to a reduction in prices.

“Even with slower revenue growth in the March quarter, corporate revenue is estimated to have grown 8% in fiscal year 2023-24," said Miren Lodha, senior director at CRISIL Market Intelligence & Analytics.

In FY25, consumer discretionary segments, comprising both goods and services, will grow despite easing of the post-pandemic release of pent-up demand. Growth in the consumer staples segment will pick up pace owing to resumption of rural demand, Lodha added.