Mumbai: Demonetisation, which has not affected Union finance minister’s Arun Jaitley’s tax collection, is expected to clip off four per cent from corporate topline growth for the third quarter of 2017.
According to some analysts, this may continue in the fourth quarter but with a recovery of 5-7 per cent in the pace of growth. “The revenue growth in the previous three quarters is averaged at 6.3 per cent.”
Predicting a tough time for the Indian industry post-demonetisation, Emkay Global Research says that deceleration in demand and rising raw material cost are likely to impact margins for several sectors, barring the commodity sectors.
The decline in bank credit growth to 5.1 per cent in December 2016 forebodes a sharp deceleration in sales for the industrial sector. Prasad Koparkar, senior director, Crisil Research, said they expect key consumption-driven sectors such as automobiles, telecom and FMCG to record the slowest growth in two years.
However, Mr Koparkar said that steel product companies may report a robust 25 per cent growth, primarily led by 18 per cent higher realisations helped by government support and robust export growth.
“The aggregate revenue of large pharma formulation firms is also expected to surge 11 per cent, given new product launches in the US, with a few products enjoying market exclusivity.”
He, further, observed that, “The impact of demonetisation, on the broader economy, is also evident from the sharp decline in non-food credit growth that slipped to a decadal low of 5.3 per cent in December.”
Dhananajay Sinha, head research, Emkay Global Research, also pointed out that the higher revenue spending by the government as part of the reflationary stance, has come at the cost of contraction in capital outlay. This along with the recent weakening corporate performance indicates sustained lack of incentive for the private capital expenditure. Other headwinds faced were continuing low exports due to rise in global protectionism.
