CRISIL Research, a global analytical company providing ratings, research, and risk and policy advisory services, in its latest report has said that India Inc’s revenue growth may halve in the fourth quarter of current financial year (Q4FY19) on account of slump in commodity prices. The decline will be led by key commodities such as steel products, aluminium, natural gas and petrochemicals, which have softened significantly, impacting realisations. The agency is expecting on-year corporate revenue growth for the current quarter to print at 8-9%, down sharply from the average of 16.5% in the previous three quarters.
However, it expects fall in input costs will shore up profitability of end-user industries. The decline in revenue growth will be cushioned by other consumer sectors. Among others, retail has support from positive demand sentiment, while airline services stand to benefit from a sharp increase in domestic fares this quarter. Export-linked sectors such as IT services and pharmaceuticals, on their part, stand to gain from a weakening in the rupee on a year-on-year basis, though it has strengthened quarter-on-quarter.
Besides, with lower top-line growth, India Inc is staring at dampened profitability at the operating level. Growth in operating profit, or earnings before interest, tax, depreciation and amortisation, is expected to print lower, at 7% on-year compared with the 13% average in the preceding three quarters. The forecast is based on CRISIL Research’s analysis of 354 companies, which account for 67% of the market capitalisation of the National Stock Exchange, excluding banking, financial services and insurance (BFSI) and oil sectors.