India Inc Q2FY25 revenue growth seen at 5-7%, slowest in 4 yrs: CRISIL

The analysis shared by CRISIL is based on 435 companies that account for almost half of the listed market capitalisation, which reported an 8.3 per cent growth in the April-June quarter

The revenue growth of Indian companies for the July-September quarter is estimated to be 5-7 per cent year-on-year (Y-o-Y), marking the slowest growth in 16 quarters, rating agency CRISIL said on Thursday.    The slowdown was attributed to the stagnant performance in the construction sector, which accounts for 20 per cent of the total India Inc’s revenue.   The agency also cited a decline in the industrial commodities sector and subdued growth in investment-linked sectors as contributing factors. “Revenue of industrial commodities, investment and construction-linked sectors, collectively accounting for 38 per cent of our sample set, grew only 1 per cent, weighing down overall performance,” Pushan Sharma, director-Research, CRISIL Market Intelligence and Analytics, said. 

   The analysis is based on 435 companies that account for almost half of the listed market capitalisation, which reported an 8.3 per cent growth in the April-June quarter. 

Which sectors witnessed a dip in revenue

In the investment sector, the power segment, which accounts for about 70 per cent of revenue, grew by only 1 per cent due to reduced power demand from above-normal monsoons.   Meanwhile, in construction-linked sectors, steel revenue decreased by 2-3 per cent due to price drops driven by cheap Chinese imports. The cement sector’s revenue growth also slipped 2-3 per cent on account of sluggish government spending after the Lok Sabha elections among other reasons. The agriculture sector was impacted due to fall in raw material prices.   The agency also predicted that India Inc’s profitability is expected to improve, with estimated earnings before interest, taxes, depreciation, and amortisation (ebitda) margins increasing 70-90 basis points (bps) Y-o-Y during the quarter. This is expected to be led by export-linked sectors and select investment-linked sectors. 

What are the positives

CRISIL said that the exports segment grew by around 5 per cent, within which, the pharmaceutical sector continued to perform strongly and recorded an 11 per cent revenue growth.   IT services, which make up about 70 per cent of the segment's revenue, saw modest growth of 3-4 per cent. This was driven by clients in banking and financial services deferring non-essential projects.   Consumer discretionary, staple products and services recorded 15 per cent revenue growth. Within this, two-wheeler players saw 15-16 per cent revenue growth due to rural recovery. The telecom services’ revenue increased 12-13 per cent due to tariff hikes across technologies. The overall earnings before interest, taxes, depreciation, and amortization (Ebitda) for all 435 companies grew by 10 per cent Y-o-Y, the agency said.