Here is why India needs to worry
India Inc is set to report a decline in both revenue as well as profit growth numbers in the December quarter, says a report.
India Inc is set to report a decline in both revenue as well as profit growth numbers in the December quarter, says a report. Revenue growth will dip by up to 5 percentage points on average to 12-13 percent, domestic ratings agency Crisil said in a report Monday and attributed the estimate mainly to high base in general and also due to certain sector specific issues.
Auto companies will post a revenue growth of only 4 percent on rise in ownership costs and weaker finance options which have crimped sales during the quarter, while the same for the FMCG sector will be 8 percent on sluggish rural demand, it said, adding sugar, aluminium and telecom will face pressure from lower realisations.
Operating profit growth will decline to 10 percent, a sharp decline from 15 percent growth levels achieved in the preceding three quarters, the report said. Commodity-linked sectors will see a jump in revenue growth, led by natural gas (37 percent), steel products (27 percent), cement (10 percent), while infrastructure-related sectors like construction are expected to clip at 12 percent.
The rupee was weaker by 11 percent during the quarter, which will benefit export-linked sectors such as software and pharma, which are estimated to grow by 21 percent and 10 percent, respectively, it said.
"Commodity and infrastructure-linked sectors are expected to support revenue for the December quarter," said Prasad Koparkar, a senior senior director at Crisil. In consumption spending-led sectors such as airlines and retail, revenue will be supported by positive demand sentiment, while in export-oriented segments such as software services and pharma, the boost would come from a weak rupee, he said.
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