The Indian industry is likely to log lower revenue growth of 9-10 percent for the second quarter of the current fiscal due to slower export expansion and weak performance of the investment sector, revealed by research firm CRISIL.
On the profitability front, CRISIL foresees a 0.5 percent basis point y-o-y jump in EBITDA (operating profit) margins in Q2 FY15. "CRISIL Research expects India Inc. to report a revenue growth of 9-10 percent year-on-year in the September 2014 quarter, lower than 13 percent growth reported in the June quarter, due to slower growth in export-oriented sectors and the continued weak performance of investment-linked sectors," the firm said.
The forecast is based on an analysis of 600 companies, except financial services and oil companies, representing 71 percent of the overall market capitalisation of India Inc. Export-oriented sectors have been performing extremely well in the past 5 quarters.
"Despite healthy volume growth, we project revenue growth of IT service providers to decline to an 8-quarter low of 12 percent. Similarly, revenue growth of the pharmaceutical sector is also forecast to fall to 14 percent from 16.3 percent in the preceding quarter," said Mukesh Agarwal, President, CRISIL Research.
In textile sector, cotton spinners are likely to see 9 percent revenue decline on lower export demand from China. Automobile and steel sectors are expected to post 12-14 percent revenue growth on the back of higher sales volumes as well as strong performance of overseas operations of some companies.
FMCG companies are likely to grow by about 15 percent, propelled by an increase in realisations and superior product mix, CRISIL said. Crisil said however that the cement industry is forecast to buck the trend and is expected to see revenue growth of 15-17 percent, driven largely by increase in realisations on a low base of last year.
"The steel and cement sectors will see a 0.9 percent and 1.8 percent improvement, respectively, owing to higher realisations," said Prasad Koparkar, Senior Director, Crisil Research.
The research firm expects the IT services’ sector margins to improve by about 0.85 percent due to better employee utilisation. It said the surge in data revenues and cost control will drive a 1.1 percent expansion in EBITDA margins of telecom operators.