India Inc is expected to record a revenue growth of around 7-8 per cent YoY in Q4FY25, stated a report by ICRA. This, it added, will be led by revival in rural demand and uptick in Government spending. However, headwinds like the evolving global uncertainties, especially trade tariffs, can weigh on the growth levels.
The recovery in operating profit margins (OPM) for India Inc, witnessed over the past quarter, is likely to be sustained at approximately 18.2-18.4 per cent, supported by an increase in demand, led by improved consumer sentiments. Owing to the recent announcement of 25 bps cut in repo rate by the RBI MPC which will lead to lower interest costs, interest coverage ratio for India Inc will see a marginal expansion to around 4.6-4.7 times in Q4FY25, against 4.5 times in Q3FY25.
Kinjal Shah, Senior Vice President & Co-Group Head – Corporate Ratings, ICRA Limited, said, “Rural demand is expected to be upbeat in H1 CY2025, aided by the robust output for most kharif crops and the favourable outlook for the ongoing rabi season. Beyond that, a normal and well distributed monsoon in 2025 is crucial to support the agricultural outcomes. Further, after remaining sluggish over the last few quarters, urban demand is expected to improve, aided by the sizeable income-tax relief in the Union Budget 2025, the monetary easing by the Reserve Bank of India, and the expectations of a moderation in food inflation, which would augment discretionary consumption.”
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Further, it added that the key monitorables over the near term will be evolution of the global economic and political scenario, movement in foreign exchange rates, impact of the new US President’s policies, pick up in government spending and a revival in the domestic urban demand.
Overall, per ICRA, the private capital expenditure (capex) cycle is expected to remain measured in view of the uncertainties around geopolitical developments and relatively subdued outlook on merchandise exports from India. Nonetheless, certain sunrise sectors such as electronics, semi-conductors and niche segments within the automotive space like electric vehicles will continue to see a scale-up in investments, in line with the various production-linked incentives programmes announced by the Government of India.
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