Corp revenue may grow only 2% in Dec qtr: Crisil

Corporate revenue (rpt) revenue growth is expected to fall around 2 per cent for the December quarter owing to a plunge in commodity prices coupled with weaker investment demand, according to Crisil Research.
"Crisil Research expects corporate (excluding BFSI and oil and gas companies) revenue to grow a measly 2 per cent in the three months ended December 31, 2015, driven by low-base effect amid crushed commodity prices, weak investment demand, flagging rural consumption," it said in a statement.
Corporate revenue (rpt) revenue witnessed a growth rate of 5 per cent in the corresponding quarter last fiscal.
Excluding sectors with topline linked to commodity cycle such as steel, petrochemicals and man-made fibres, the revenue growth is likely to improve, it said.

The research firm further said the earnings before interest, depreciation, taxes and amortisation (Ebidta) growth is expected to improve by just 1.8 per cent (180 basis points) to 5.8 per cent against 4 per cent in the first half of the current fiscal, propelled by improvement in gross margin.
"With growth rates still trending below estimates, we believe the consensus earnings estimates for both this fiscal and next will have to be pared further," it added.

Crisil analysis is based on 600 companies (excluding financials and oil and gas) that account for 70 per cent of the market capitalisation of the NSE.

"Sectors more focused on urban consumers such as automobiles, media, retail, and telecom are projected to post healthy double-digit topline growth.
"Mid-sized pharmaceutical companies are also expected to do well due to strong growth in exports to the US. But in general, India Inc is grappling with poor demand sentiment. With lower input costs and intense competition, pricing has also been impacted," Crisil Research Senior Director Prasad Koparkar said.
Besides, the Chennai floods will also impact the December quarter numbers of consumer discretionary sectors as well as IT services, auto components and engineering, he added.
It expects capital goods manufacturers to see a growth of nearly 2 per cent.

According to the survey, every third MSME is also facing
delay in receivables from clients, which has curbed its ability to repay creditors and pay salaries on time.
The steel sector was the most impacted on this score, with nearly two-thirds of respondents admitting to problems, followed by textiles, logistics and construction sectors.
However, those engaged in human resource-based services such as recruitment agencies, security services and IT services had it relatively easy.
Nearly two-thirds of them, from sectors such as pharmaceuticals, IT services, auto components, auto dealerships and consumer products, had reported good sales in the first half.
Besides, revenue growth is also expected to be lower than previous estimates, the survey revealed. Overall, growth estimates for FY 2017, which was expected at 15-20 per cent before demonetisation, is now seen at 6 to 8 per cent.

"MSMEs located in Tier 2 cities and smaller towns have witnessed a significant shift (42 per cent of respondents) to cheque or electronic payments, indicating that the transition is geography agnostic, and, therefore, has greater implications in the way transactions take place in small cities and towns," said Suyash.
But because of greater reliance on cash, sales of MSMEs in smaller towns are expected to be impacted more than in metro and Tier 1 cities. While a third of those in Tier 2 cities and smaller towns expect a decline in revenue in the second half, only a quarter in metros and Tier 1 cities feel similarly.

In terms of regions, south and west India are expected to fare better than the cash-heavy regions of north and east. A third of MSMEs in east and north are expected to report negative growth (year-on-year) in the second half of this fiscal compared with 25 per cent in the west and the south.
The survey by Crisil covered more than 1,100 MSMEs between November 24 and December 24.
Around 58 per cent of the respondents of the survey are from the manufacturing sector and the rest from services, and nearly half of the sample had revenues under Rs 2 crore. About 53 per cent of them are from metros or Tier 1 cities and the rest from Tier 2 cities and smaller towns.