India Inc is likely to report a halving of revenue growth in the fourth quarter of FY23, a credit rating agency said on Thursday, as companies start reporting their financials. The revenue growth will come down to 10-12 per cent as against 22.8 per cent for the January-March period in the year-ago, Crisil's Market Intelligence and Analytics arm said.
For the full fiscal FY23, revenue is estimated to have grown 19-21 per cent, which is slower than over 27 per cent growth registered in FY22, it said, adding that operating margin is likely to have moderated by 3 percentage points. The continuing headwinds to exports which have had an impact on volume growth, and the high-base were cited as the main reasons which will cause the sharp slowdown in topline growth for Q4FY23, Crisil, which analysed 300 companies across 47 sectors to arrive at the expectations, said.
It said revenues of commodities and export-oriented sectors such as textiles, gems and jewellery, and information technology-enabled services, declined on-year. Steel products, which account for around 11 per cent of the revenue of the set, are estimated to have witnessed a 7-9 per cent drop in revenue on-year during the March quarter due to the imposition of export duty in May 2022 and weakness in global demand amid elevated input costs.
Similarly, muted global demand is expected to have driven a 17-19 per cent fall in revenue for the aluminium industry, it said. Consumer discretionary products such as airlines, hotels, media and entertainment, and retail led to the revenue growth, while demand for consumer staples such as pharmaceuticals and fast-moving consumer goods (FMCG) continued its growth momentum, its director for research Ankit Dani said.
Hotel revenues are expected to grow 98 per cent, airlines by 67 per cent and telcos by 13 per cent, it said. On the profitability front, operating profit margin is estimated to have improved a tad for the second consecutive quarter -- from 19 per cent in the December 2022 quarter to 19-20 per cent during the March 2023 quarter, the agency said. "Prices of key energy-linked commodities such as crude oil and non-coking coal seem to have come off their earlier highs and will partially offset the impact of lower global demand," its associate director Sehul Bhatt said. Corporates are likely to see their profitability improve this fiscal as commodity prices scale down and volumes drive revenue growth, it said.