NEW DELHI: India Inc’s revenue growth remained modest in the September quarter, while profitability came under pressure, a report by Crisil Market Intelligence and Analytics said on Thursday.
Corporate revenue is estimated to have risen 5–6 per cent year-on-year in the July–September period, driven by a subdued performance in power, coal, information technology (IT) services, and steel sectors.
These sectors together account for nearly one-third of the total revenue of 600 companies analysed by the agency.
Sequentially, revenue growth during the September quarter was one percentage point higher than the preceding June quarter, the report said.
However, operating profit margins or profitabiluty likely contracted by 0.50–1 per cent year-on-year, as companies in automobile, pharmaceutical, and aluminium sectors struggled to fully pass on higher input costs to consumers.
Geopolitical uncertainties and project deferrals continued to weigh on IT services, limiting revenue growth to about 1 per cent. The steel sector’s revenue likely rose 4 per cent on-year despite 9 per cent volume growth, hurt by a decline in steel prices.
The power sector’s revenue is expected to have grown a mere 1 per cent, impacted by higher hydro generation and a 10 per cent increase in renewable output, which curtailed coal-based generation. Consequently, coal sector revenue remained flat, the report added.
GST rates
Anticipation of new goods and services tax (GST) rates disrupted sales in some consumer-facing industries. Retailers and distributors delayed FMCG purchases, while high inventory levels and weak retail sales dampened demand for passenger vehicles.
On the brighter side, a robust monsoon and higher minimum support prices for kharif crops boosted rural sentiment, lifting demand for tractors and two-wheelers. Tractor manufacturers’ revenue is estimated to have surged 36 per cent, driven by a 31 per cent rise in volume, while two-wheeler revenue likely grew 9 per cent.
The cement sector rebounded with 8 per cent revenue growth, supported by a 6–7 per cent volume rise over a low base and pre-festival demand. The pharmaceutical sector likely grew 8 per cent on steady export and domestic demand, while telecom services revenue rose 7 per cent on account of higher realisations from costlier subscription plans.
On the profitability side, automobile sector margins are estimated to have contracted 1.5–2 per cent due to higher aluminium prices, which rose 11 per cent. Aluminium producers’ margins also slipped 1–1.5 per cent amid weaker export realisations.
Pharmaceutical sector margins likely declined 1.5–2 per cent owing to pricing pressure and intense competition in export markets. However, cement, steel, and telecom sectors are expected to have expanded their margins during the quarter, the report said.
