ICRA evaluated aggregate revenues of 579 listed companies and stated that it rose by 3.7 per cent on-year during the third quarter of FY2024, enhancing margins. This, it said, was supported by sectors like airlines, hotels, automotive, and FMCG due to a steady improvement in demand, especially during the festive season. The YoY revenue expansion was curtailed to an extent by a general decline in realisation levels amid softening input costs (mainly raw materials) for most of the sectors.
Operating leverage benefits coupled with the easing of some input costs led to a YoY expansion in the operating profit margin (OPM) of India Inc by 171 bps to 17.2 per cent in Q3 FY2024. Although input costs softened in recent months, they remain elevated over historic levels, and as a result, India Inc’s OPM is yet to reach the levels of 18-19 per cent witnessed during FY2022, the report stated.
Despite the variations in debt levels across sectors, India Inc reported largely stable credit metrics over the recent past. The improvement in earnings on the back of recovery in demand across sectors arrested any sharp increase in gearing and Debt/OPBITDA levels during H1 FY2024. Per ICRA, India Inc is expected to report stable credit metrics, going forward, despite expectations of some debt addition to support growth.
Further, ICRA expects the revenue growth to marginally slow down in Q4 FY2024 (on a QoQ basis), on a relatively high base, a perceived pause in the infrastructural activities as the model code of conduct kicks in ahead of the General Elections, and uncertainties in the global macro environment. Moreover, the concerns of the ongoing geopolitical tensions may adversely impact demand sentiments, especially for export-oriented sectors. Accordingly, India Inc’s ability to navigate these challenges remains critical, it said.