India Inc Likely To Report 8–10% Revenue Growth In Q3: Report

Corporates' revenues are likely to have grown 8-10%in the 2023 December quarter on an annual basis, according to a report.

The operating profits have likely expanded 100-150 basis points on-year in the three months ended December 2023, giving the corporates an overall operating margin of 19-20% in the first nine months of 2023-24 fiscal, as per Crisil Ratings.

Revenue growth would have been stronger but for the decline in agri-linked sectors such as fertilisers, consumer staples such as edible oils, industrial commodities like chlor-alkalis and commodity chemicals, and aluminium, Crisil Ratings said in the report based on the analysis of 350 companies, excluding financial services and oil and gas sectors.

Also, the rating agency said that revenue growth seemed to be propelled by volume.

Aniket Dani, a director with the agency, said construction-linked sectors, which together account for 20 per cent of the overall revenue, grew 5-7% as construction activity picked up after the monsoons, thus augmenting growth of cement and steel companies.

The revenues continued to be driven by consumer discretionary products and services, and consumer staples.

While automobiles, airlines, retail and hospitality supported growth, a healthy performance of pharmaceuticals and IT services, helped export-linked sectors login in a 16% jump in revenue outpacing the overall revenue growth.

According to Arindam Pal, an associate director with the agency, India Inc has continued to benefit from softening input costs, which are likely to give a leg-up to volume growth.

Prices of key commodities such as coal and crude have eased, as have power and freight cost. This, coupled with continued volume growth, will support operating profitability in the near term, it added.

The automobiles sector likely grew 13-15% in the 2023 December quarter.

Airlines and hotels sectors grew a robust 25% and 44%, respectively, led by strong domestic tourism. This, coupled with an 8-10% growth in the media and entertainment industry, pushed up revenue of the consumer discretionary services vertical 13-15%, it added.

Construction companies likely saw a 7-9% growth, supported by a healthy rise in order inflows due to the government thrust on infrastructure and urban development.

The telecom industry managed to clock 150-200 basis points improvement in profitability due to stable costs and higher realisation from tariff revisions and migration of customers from 2G and 3G to 4G and 5G.