Rating agency ICRA on Monday said it expects sequential revenue growth for India Inc in the December quarter, led by improved rural demand and uptick in government spending, additionally supported by the festival season.
However, headwinds such as uneven urban demand and evolving global uncertainties could weigh on growth in the second half of the fiscal, it said.
On balance, ICRA said it expects the operating profit margin (OPM) for India Inc to improve in the coming quarters.
As a result, the credit metrics of India Inc in the October-December period of fiscal 2025 are estimated to improve with the interest coverage ratio in the range of 4.5-5 times, against 4.1 times in the September quarter, the agency said.
Commenting on the trends, Kinjal Shah, senior vice president and co-group head of corporate ratings said while corporate India witnessed a muted sequential revenue growth in September quarter of fiscal 2025, led by the ongoing slowdown in urban demand, lower government spending amid monsoon-related disruptions, the same is expected to improve in the upcoming quarters.
"This would be supported by continued growth in consumption-oriented sectors like FMCG, retail as well as improved revenues in commodity-oriented sectors like iron and steel and cement, among others, led by uptick in government capex spending as well as increased rural demand," Shah added.
ICRA's analysis of the September quarter performance of 590 listed companies (excluding financial sector entities) revealed a 6% year-on-year (YoY) revenue growth for corporate India and a moderation in OPM, by 102 bps to 16.9%.
Despite the year-on-year growth in revenues, higher input cost with weak urban demand, adversely impacted the margins, it said.
On a sequential basis, the OPM declined about 81 bps in the July-September period of the ongoing fiscal year.
While the input costs have softened in recent months, they remained higher compared to the historic levels, and accordingly, India Inc's OPM is yet to revive to its historic highs (19% in fiscal 2022), ICRA added.
Essential Business Intelligence, Continuous LIVE TV, Sharp Market Insights, Practical Personal Finance Advice and Latest Stories — On NDTV Profit.