Rating agency ICRA in its latest report highlighted that revenues of Indian corporates have jumped 22% in the first quarter of current financial year (Q1FY19) as compared to same quarter in previous year. The increase in revenues has been attributed to the strong growth in both consumer-based industries and commodity sectors. Consumer-based industries include consumer goods, and auto; and commodity sectors such cement, iron, steel, and oil and gas.
As per report, in the first quarter, the two sectors which have done well are pharmaceuticals and information technology (IT). In the First quarter results of current financial year Pharmaceuticals sector showed a growth of 20.8% supported by strong performance in the domestic markets. The IT sector reported a healthy growth of 12.9% over the corresponding period last year on account of their strong performance in their digital offerings and partial recovery in the financial services sector.
ICRA noted that ‘The strong revenue growth has ensured that companies were able to protect their EBTIDA margins (overall flat) to a larger extent on both Y-o-Y (year-on-year) and Q-o-Q (quarter-on-quarter) basis, reflecting that they have managed to offset the increase in raw material and fuel price through price hikes, operating leverage and cost reduction’.
Though, EBTIDA margins for a few industries such as airlines and cement have been under pressure. The EBTIDA margin of the airline industry was under pressure on account of rising fuel prices, weaker rupee and competitive pressures. EBTIDA margin of the cement sector was negatively impacted by a rise in raw materials’ prices and freight rates.