India Inc's Slowest Quarterly Growth Since Pandemic Recovery. See What CRISIL Has To Say

CRISIL's analysis is based on data from around 350 companies, excluding the financial services and oil and gas sectors

Among the 47 sectors monitored by CRISIL, only 12 are expected to have seen improvement in revenue growth both sequentially and on an annual basis during the quarter.

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India Inc is projected to have witnessed a revenue growth of 4-6 per cent in the January-March quarter, marking the slowest quarterly growth since the recovery from the Covid-19 pandemic began in September 2021, CRISIL says in its report. This analysis is based on data from around 350 companies, excluding the financial services and oil and gas sectors.

Despite the moderation, the growth follows a period of strong performance in previous years and occurs against a higher base. Among the 47 sectors monitored by CRISIL, only 12 are expected to have seen improvement in revenue growth both sequentially and on an annual basis during the quarter.

The consumer discretionary products and services sector led the quarter's performance, with the automobile industry showing healthy growth due to increased passenger vehicle sales and previous price hikes. Additionally, the organised retail sector continued its growth trend for the 13^th consecutive quarter, supported by strong urban demand.

Discretionary services, including airlines and hotels, also benefited from the revival of MICE (meetings, incentives, conferences, and exhibitions), weddings, and corporate travel segments.

On the other hand, construction-linked sectors showed slow revenue growth due to a high base from the fourth quarter of fiscal 2023, which had seen construction companies achieve their highest quarterly revenue. In the cement sector, despite steady demand, revenue growth was moderate as prices faced pressure from higher supply and competition.

Miren Lodha, Senior Director of CRISIL MI&A Research, stated, "Despite slower revenue growth in the March quarter, corporate revenue is estimated to have grown by approximately 8 per cent in fiscal 2024. In fiscal 2025, revenue growth is expected to improve to 9-10 per cent, driven by sectors less dependent on commodities and those focusing on the domestic market."

Consumer discretionary segments are expected to continue growing despite the easing of post-pandemic pent-up demand. Growth in the consumer staples segment is expected to accelerate with the resurgence of rural demand.

Regarding margins, an improvement of 100 basis points is projected on a yearly basis for the March quarter. Earnings before interest, tax, depreciation, and amortization (Ebitda) margins for around 350 companies continued to expand through fiscal 2024.

Consumer discretionary services and export-linked sectors likely led the margin expansion, with telecom services benefiting from lower license fees, spectrum charges, and network operating expenses. Meanwhile, the steel sector may have faced a decline in margin due to import pressures affecting prices.

Aniket Dani, Director of CRISIL MI&A Research, said, "Despite single-digit revenue growth, margins have increased yearly for four consecutive quarters, indicating a shift in corporate focus towards profitability. An estimated improvement of 150 basis points on an annual basis is expected for fiscal 2024. As supply pressures ease, commodity prices are likely to stabilise in fiscal 2025, aiding India Inc in achieving a 50-150 basis points improvement in Ebitda margin. Sectors such as consumer staples, discretionary products, and industrial sectors, which comprise 52 per cent of corporate India's Ebitda, are expected to experience the highest margin expansion."