CRISIL Research, India's largest independent and integrated research house, expects India Inc.'s revenue growth to slip to a 7- quarter low of 2.5 per cent on a year-on-year (y-o-y) basis in the March 2015 quarter.
In the preceding quarter as well, revenue growth was a tepid 5.4 per cent. On the profitability front, though, we foresee a marginal uptick in EBITDA margins.
"The year started on a promising note, with revenue growing by 12.8 per cent in Q1FY15. However, growth has decelerated in subsequent quarters with Q4 likely to show the lowest growth. Steel, petrochemicals, and manmade fibres manufacturers will be impacted by the rapid slide in global commodity prices. Sluggish growth in volumes (2 per cent y-o-y) would constrain the revenue growth of cement companies, while capital goods manufacturers are likely to see a further 13 per cent y-o-y fall in revenues.
Domestic consumption and export-oriented sectors are likely to outperform but, here too, sectors heavily dependent on rural consumption such as motorcycles, tractors, and FMCG have been facing severe pressure on volumes as unseasonal weather conditions and slow growth in crop prices have dented farm incomes.
This would impact topline growth for companies in these sectors. For example, we forecast FMCG companies to report revenue growth of 8-9 per cent in Q4FY15, down from 14 per cent
growth in the first half of the year.
Telecom companies have not been as severely impacted by subdued rural consumption; spike in data usage in urban areas is expected to propel 11 per cent growth in their topline.
Other sectors likely to report double-digit topline growth include IT services, pharmaceuticals, and auto components.