India Inc Reports Low Revenue Growth In Q1 of Current Financial Year : ICRA

Magazine

Team Industry Outlook | Monday, 16 September 2019

Text Size:

India’s corporate sector cumulative revenue growth of 642 companies dropped down to 5.7 percent, an 11-quarter low in April to June quarter of the current financial year. The all-time low is being subjected to the weak consumer sentiments and government’s reluctance on infrastructure spending.

The figures were reflected in a contraction of 7.7 percent in revenues coming from consumer-oriented sectors. And with the government spending very low on infrastructure in the quarters of January to March and April to June also lead to low demand in the infrastructure segment.

The gross fixed capital formation also dropped to 3.6 percent from 4 percent in the two quarters. However, there has been a marginal improvement in EBITDA of 136 basis points on a year-on-year basis. These figures remained constant at 17.7 percent in quarter one of this financial year.

Shamsher Dewan, the Vice President and Sector Head of Corporate Sector Ratings at ICRA said,” The weakness in the consumer-linked sectors has been visible in multiple sectors. Automobiles sales reported sharp double-digit decline which has continued into the current quarter as well while FMCG companies reported a sequential slowdown in volume growth in both rural and urban markets.”

But, companies in the consumer durables sector showed a growth because of an increase in sales of cooling products due to the harsh summer season.
“The contraction in PBT margins was due to the subdued volumes, negative operating leverage, high discounting and tepid realization in select commodity sectors, especially metals,” added Dewan.

Many sectors like oil and gas, construction and telecom saw a growth in the interest costs on a year-on-year basis. The automobile sector witnessed a decline of 18 percent in domestic sales of passenger vehicle segment in quarter one.