Representative image
Credit: iStock Photo
New Delhi: India Inc’s revenue growth likely slowed to 4-6% in April-June quarter from around 7% growth recorded in the previous two quarters, due to sluggish performance by power, coal, information technology services and steel sectors, data analysed by Crisil Ratings showed.
“The early onset of monsoon and lingering geopolitical uncertainties are expected to have materially impacted some sectors in April-June,” said Pushan Sharma, Director, Crisil Intelligence.
Earnings before interest, tax, depreciation and amortisation (EBITDA) of India Inc is estimated to decline by 10-30 basis points to 4% in the quarter ended June 30 year-on-year.
EBITDA margins have been dragged by companies in IT services, automobile, fast-moving consumer goods (FMCG) and pharmaceuticals.
Crisil data is based on analysis of the financial results of over 600 companies, which account for more than half of the market capitalisation of the National Stock Exchange.
Poor growth in India Inc earnings is reflected in the stock markets. The benchmark indices of the Indian equity markets slumped for the third straight session on Monday.
The benchmark Sensex of the BSE fell 0.70% or 572 points to 80,891.02 points. The wider Nifty 50 of the NSE closed 0.63% or 156.10 points lower dragged by large-cap IT firms and financial stocks. Sensex and Nifty 50 have slumped to their lowest level in nearly two months.
Large scale job cuts announced by Tata Consultancy Services (TCS) have sparked concerns about demands and slower margins in the IT industry.
"Geopolitical uncertainties impacted the IT services sector, where revenue growth is seen flat on-year due to project delays stemming from tariff worries, which led to a slowdown in activity," said Sharma.
The country's largest IT services company TCS revenue in April-June quarter increased by 1.3% year-on-year while its profit rose by 6%.
Crisil noted that revenue and profits of the electricity and coal sectors were hit due to lower demands.
Steel sector’s revenue is expected to have grown a moderate 1-3% on-year, due to planned maintenance shutdowns at major steel mills and a 2-4% on-year decline in prices.
Auto sector’s revenue is foreseen rising 4% on-year owing to higher retail sales, partially offset by high inventory. An increase in prices stemming from changes in product mix and higher export realisations likely helped revenue grow, Crisil said.
The sectors that have performed well during the first quarter of the current financial year include pharmaceuticals, telecom services, organised retail, aluminium and airline.
Revenue for pharmaceuticals is seen up 9-11% on-year, higher than corporate India’s revenue growth for the past 10 quarters, driven by strong export demand and a stable domestic market.
Telecom services is estimated to have revenue growth of 12% year-on-year while revenue of aluminium sector likely jumped by 23% during the quarter under review.