Crisil Research in its report has estimated a sharp drop in demand across consumption segments pulled down corporate revenue by 3% in the second quarter of current financial year (Q2FY20). This is the first time in 14 quarters -- three and a half years -- that revenues have fallen in a quarter. It is largely on the back of a sharp drop in demand across consumption segments - excluding that of banking, financial services, insurance and oil companies. In the previous four quarters, i.e. between Q2FY19 and Q1FY20, aggregate revenue had grown 11-12% on an average.
The estimate is based on an analysis of 430 companies, which account for 65% of the market capitalisation, excluding financial services and oil firms, of the National Stock Exchange. CRISIL Research, Senior Director, Prasad Koparkar said, Automobiles, one of the key sectors driven by consumption spending, continues to reel under a demand slowdown. Aggregate revenue of listed automobile players is estimated to have dropped around 25% in the second quarter. In a rub-off, the revenue of automotive component makers is estimated to have fallen 14-16% amid production cuts.
Construction-linked sectors are expected to log an overall decline of 5% on-year in revenue in the second quarter. This is on account of 15% on-year decline in steel products, mainly due to declining realisations, as flat steel prices dropped 14%. Cement players, though, will likely log a 5-6% rise in revenue despite a drop in volumes, given higher realisations. On the industrial side, revenue of petrochemical companies is expected to fall 23-25% due to lower petrochemical realisations amid a fall in feedstock naphtha prices (25% on-year decline) following lower crude oil prices. For companies in power sector, aggregate revenue growth is estimated to have logged a slower pace of 3-4% against an average of 10% in the previous four quarters due to a slowdown in power demand across regions.