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Business Other News 08 Jan 2019 India Inc to see dip ...

India Inc to see dip in revenue growth

DECCAN CHRONICLE.
Published Jan 8, 2019, 12:52 am IST
Updated Jan 8, 2019, 12:52 am IST
Growth in operating profit is also expected to print lower, at just below 10% compared with 15% over the preceding three quarters.
Despite  softening of commodity prices and a weakening of rupee, the prices of most common commodities remain high on-year.
 Despite softening of commodity prices and a weakening of rupee, the prices of most common commodities remain high on-year.

Mumbai: India Inc’s revenue growth is likely to fall by 400-500 basis points during the quarter ended December 2018 as high base effect and demand slowdown is some of the key sectors could put pressure on their toplines. 

According to Crisil, corporate revenue growth is expected to print at 12-13 per cent, lower than the 17 per cent on average in the first two quarters. “That’s primarily because of the high-base effect created by the 13 per cent growth seen in the third quarter of last fiscal, which followed 7 per cent in the preceding two quarters,” it said. 

 

Growth in operating profit is also expected to print lower, at just below 10 per cent compared with 15 per cent over the preceding three quarters. 

Linked to this, Crisil said India Inc is expected to report a margin contraction of 50 basis points year on year for the quarter amid rising raw material costs across sectors.

“Commodity and infrastructure-linked sectors are expected to support revenues for the quarter ended December. Steel, cement, natural gas and petrochemicals are expected to be driven by volume and/or realisation growth, while sectors such as construction and capital goods are expected to grow on a pickup in execution of key infrastructure-led government schemes. In consumption spending-led sectors such as airline services and retail, revenues will be supported by positive demand sentiment, while in export-oriented segments such as IT services and pharma, the boost would come from a weak rupee on a y-o-y basis,” said Prasad Koparkar, senior director, Crisil.

However, overall revenue growth will be constrained by a demand slowdown in automobiles, sugar, aluminium and telecom services. 

Automobiles revenue is expected to have been impacted by a rise in ownership costs, while the other sectors would bear the impact of lower realisations and competitive pressures. 

Even with healthy topline growth, India Inc is expected to face dampened profitability at the operating level with rising input prices building pressure on the cost structure. 

Despite softening of commodity prices and a weakening of the rupee towards the end of Q3 FY19, the prices of most common commodities remain high on-year. 

“Having said that, full impact of the softening may be visible in the fourth quarter of this fiscal,” it said.

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