India Inc is expected to post a revenue growth of 5-7 per cent on-year for the three months ended September, marking the slowest pace in the past 16 quarters, stated a report by CRISIL. The slow pace of growth, it added, was due to stagnant performance in the construction vertical, which accounts for a fifth of India Inc’s revenue, besides a decline in the industrial commodities vertical and subdued growth in investment-linked sectors.
CRISIL analysed 435 companies that account for almost half of the listed market capitalization to conclude the findings. It said that these companies posted 8.3 per cent growth in the April-June quarter.
Pushan Sharma, Director- Research, CRISIL Market Intelligence and Analytics, said, “Revenue of industrial commodities, investment and construction-linked sectors—collectively accounting for ~38 per cent of our sample set—grew only 1 per cent, weighing down overall performance. The industrial commodities sector, such as coal, saw a 6-7 per cent revenue decline due to lower coal offtake, coal-based power generation and e-auction premiums. In the investment sector, the power segment (~70 per cent revenue contribution) grew just 1 per cent as above-normal monsoon reduced power demand. Among construction-linked sectors, steel revenue fell 2-3 per cent due to price drop led by cheap Chinese imports.”
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Performance across sectors
CRISIL said that the revenue growth in the cement sector slipped 2-3 per cent on a high base of the corresponding quarter last year and lower realisations due to weak prices. Further, cement volume growth was limited by sluggish government spending after elections and above-normal monsoon slowed construction activity. The monsoon also impacted the petrochemicals sector, which reported flat on-year revenue growth in the second quarter.
The agriculture sector, including fertilisers, which constitute 2 per cent of the sample set’s revenue, saw a 20-22 per cent drop in revenue due to fall in raw material prices.
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