India Inc likely to see lower growth in Q2, FY15: Crisil

On the profitability front, the research firm foresees a 0.5% basis points y-o-y jump in EBITDA margins in Q2 FY15

Indian industry is likely to log lower revenue growth of 9-10% for the second quarter of the current fiscal due to slower exports expansion and weak performance by the investment sector, research firm Crisil said today.

On the profitability front, Crisil foresees a 0.5% basis points y-o-y jump in EBITDA (operating profit) margins in Q2 FY15.

"Crisil Research expects India Inc. To report a revenue growth of 9-10% year-on-year in the September 2014 quarter, lower than 13% growth reported in the June quarter, due to slower growth in export-oriented sectors and the continued weak performance of investment-linked sectors," the firm said in a release.

The forecast is based on an analysis of 600 companies, except financial services and oil companies, representing 71% of the overall market capitalisation of India Inc.

Export-oriented sectors have been performing extremely well in the past 5 quarters. However, in the July-September quarter, the rupee appreciated by 3% against the USD on a y-o-y basis; so no gains will be reported on that front.

"Despite healthy volume growth, we project revenue growth of IT service providers to decline to an 8-quarter low of 12%. Similarly, revenue growth of the pharmaceutical sector is also forecast to fall to 14% from 16.3% in the preceding quarter," said Mukesh Agarwal, President, Crisil Research.

In textile sector, cotton spinners are likely to see 9% revenue decline on lower export demand from China.

Automobile and steel sectors are expected to post 12-14% revenue growth on the back of higher sales volumes as well as strong performance of overseas operations of some companies.

FMCG companies are likely to grow by about 15%, propelled by an increase in realisations and superior product mix, Crisil said.

"Investment-linked sectors such as construction and capital goods will continue to perform poorly, as the pace of project execution continues to be tardy," it added.

Crisil said however that the cement industry is forecast to buck the trend and is expected to see revenue growth of 15-17%, driven largely by increase in realisations on a low base of last year.

"The steel and cement sectors will see a 0.9% and 1.8% improvement, respectively, owing to higher realisations," said Prasad Koparkar, Senior Director, Crisil Research.

The research firm expects the IT services' sector margins to improve by about 0.85% due to better employee utilisation.

It said surge in data revenues and cost control will drive a 1.1% expansion in EBITDA margins of telecom operators.