India Inc’s revenue is expected to rise around 14% year-on-year for the December quarter to Rs 10.9 trillion, following a steady surge in volumes and price hikes, and driven primarily by the consumer discretionary segments. On a sequential basis, the revenue is seen rising 0.9% and profitability by 140 basis points (bps), according to a Crisil report.
“Revenue growth in the third-quarter growth would be driven by consumer discretionary items such as airlines and automobiles, while construction-linked ones such as steel, aluminium and some industrial commodities such as petrochemicals would underperform,” said Hetal Gandhi, director (research), Crisil Market Intelligence and Analytics.
India Inc’s operating margins are likely to contract 270 bps y-o-y, though slower than in the past two quarters, as easing commodity prices provided some succour amid moderating revenue growth, the report said. However, this would mark the fifth quarter of a y-o-y contraction.
On a sequential basis, operating margins would rise for the first time in six quarters to 18-19% in the third quarter from 17.2% in the quarter ended September. The number has been falling since touching 23.7% in the first quarter of last financial year.
For the nine months to December, revenue is seen up around 24% y-o-y, while margins likely contracted by about 400 bps.
Of the 47 sectors tracked, about 20 are expected to outpace the overall revenue growth in the third quarter, while three-fourths should see operating margins contracting on year, according to Crisil MI&A Research’s analysis of over 300 companies — excluding financial services and oil and gas sectors.
The ITeS or the BPO services companies are expected to see contraction, with slowdown fears in the two largest markets abroad for Indian businesses — the US and Europe. This will impact the exports of gems and jewellery, and textiles, too, as consumers in those geographies cut spending.
While revenue for airline services should climb 41% y-o-y following a significant rise in passenger traffic and fares, for automobiles, it should drive past 22% on higher domestic volume and realisations for vehicle makers.
The IT services is seen largely apace with the overall revenue trend, growing 13% y-o-y.
Revenue of construction-linked companies is seen up a fifth on a healthy rise in capex allocations by Central and state governments for infrastructure buildouts, healthy growth in order book, and improved execution.