India Inc's Q1 Revenue Growth Estimated At 4-6%: Crisil Intelligence

The revenue growth of India's corporate sector in the first quarter of this fiscal year is estimated at a modest 4-6% , down from about 7% in the previous two quarters, due to sluggish performance by power, IT services and steel sectors, according to Crisil Intelligence.

The power, coal, IT services and steel sectors collectively account for a third of the revenue of over 600 companies analysed, Crisil Intelligence said in a statement. Nevertheless, five sectors -- pharmaceuticals, telecom services, organised retail, aluminium and airline -- likely drove revenue growth for India Inc in the first quarter, it added.

"The early onset of monsoon and lingering geopolitical uncertainties are expected to have materially impacted some sectors in April-June," Crisil Intelligence Director Pushan Sharma said.

Rain-induced cooler summer culled demand for electricity. Consequently, the power sector's revenue is seen declining 8% year-on-year. The lower demand also pushed down spot prices of electricity, and led to a 2-3% lower demand for coal, Sharma said.

"On the other hand, geopolitical uncertainties impacted the IT services sector, where revenue growth is seen flat on-year due to project delays stemming from tariff worries, which led to a slowdown in activity," he added. Crisil Intelligence said the steel sector's revenue is expected to have grown a moderate 1-3% on-year, due to planned maintenance shutdowns at major steel mills and a 2-4% on-year decline in prices.

On the other hand, the auto sector's revenue is estimated to rise by 4% on-year owing to higher retail sales, partially offset by high inventory, it said, adding 'an increase in prices stemming from changes in product mix and higher export realisations likely helped revenue grow'.

The construction sector revenue is expected to climb up 6% on-year as engineering, procurement and construction companies benefited from a low base effect caused by disruptions from general elections in the first quarter of last fiscal despite no significant increase in the Union Budget allocation for the sector, it added.

In the first quarter, revenue for pharmaceuticals sector is seen up 9-11% on-year, higher than corporate India's revenue growth for the past 10 quarters, driven by strong export demand and a stable domestic market, Crisil Intelligence said.

It further said telecom services revenue is expected to grow 12% on-year, fuelled by higher realisations of around 11% on account of costlier subscription plans. Organised retail revenue likely rose 15-17% in the first quarter, led by the value fashion and food and grocery segments, it added.

Revenue expansion in the steel, cement and FMCG sectors was likely driven by volume growth of 7-9% , 3-4% and 4-5 % respectively. In the cement sector, a low base, the pre-monsoon construction spree and healthy domestic demand pushed volume higher, despite the shutdown of a few mills, while a pick-up in rural demand supported the FMCG sector's volume growth, the statement said.

Aluminium sector's revenue is seen up at 23% , owing to higher domestic demand, particularly through transmission lines, higher domestic output after Bharat Aluminium Company's expansion, more export opportunities from lower trade volatility between major economies, and an improvement in realisations due to a higher share of downstream products, Crisil Intelligence said.

Likewise, airline revenue is expected to rise 15% on year, driven by an increase of 10-12% in volume owing to expanded supply on account of reduced aircraft groundings and addition of new aircraft, it added.