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Revenue growth seen to hit a rough patch

Mumbai, June 26: Investors must brace for more bad news. India Inc’s revenue growth in the April-June period will be the lowest in six quarters at around 14 per cent, predicts Crisil Research.

That is 3.5 percentage points lower than the 17.5 per cent achieved in January-March 2012 and is blamed on the slowdown in economic activity and the sharp decline in gross fixed investments.

Earnings before interest, taxes, depreciation, and amortisation (EBITDA) margin is projected to fall 100-150 basis points year-on-year to around 19-20 per cent, though it will remain flat compared with the preceding quarter.

Crisil said revenue growth in the first quarter of this fiscal would be much weaker because of a sharp deceleration in airlines, auto parts, commercial vehicles, hotels, metals, organised retail, real estate and textiles. In a presentation made today, the research entity said margins in the shipping sector would be the worst hit. Significant over-capacity would see the industry losing margins by 10 per cent.

This is followed by sectors such as telecom services, textiles, hotels, steel and refining. In the case of steel and paper, high prices of inputs such as coal led to margin pressures.

“While policy logjam and higher cost of capital have severely dented the investment cycle, persistent inflation, economic uncertainty and high retail lending rates are weighing on consumer sentiment, thereby affecting consumption growth. We believe demand growth will continue to remain weak going forward,” Crisil Research president Mukesh Agarwal said.

 
 
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