CRISIL forecasts slowest Q4 growth for India Inc since 2021
CRISIL's analysis predicts a sluggish revenue growth of 4-6% for India Inc (top companies of India) between January-March 2024, marking the slowest quarterly growth since the COVID-19 pandemic recovery began in September 2021. The study, which excluded financial services and oil and gas sectors, was based on data from 350 companies. Strong growth in preceding years contributes partly to the high base effect, which refers to a situation where comparisons of growth become skewed because the starting point is high.
Only a quarter of sectors witnessed revenue growth
CRISIL's monitoring of 47 sectors revealed that only 12 likely experienced an increase in revenue growth both sequentially and year-on-year for the quarter ended March 31. The performance was primarily driven by consumer discretionary products and services. Particularly, the automobile sector, especially passenger vehicles, saw a surge due to increased volumes and price hikes over the past year.
Organized retail and discretionary services lead growth
The organized retail sector marked growth for the thirteenth consecutive quarter, propelled by strong urban demand. Discretionary services such as airlines and hotels benefitted from a resurgence in MICE (Meetings, Incentives, Conferences, Exhibitions), weddings, and corporate travel segments. However, construction-linked sectors reportedly saw slower revenue growth due to a high base in Q4 of fiscal 2023 when construction companies recorded their highest quarterly revenue.
Cement sector faces moderate growth amid competitive pressure
Despite steady demand, the cement sector's revenue growth remained moderate due to price pressures amid higher supply and intense competition. Miren Lodha, Senior Director at CRISIL MI&A Research, stated that "Even with slower revenue growth in March quarter, corporate revenue is estimated to have grown 8% in fiscal 2024." He further projected an improvement in revenue growth to 9-10% for fiscal 2025.
Corporate focus shifts toward profitability despite slow growth
Aniket Dani, Director at CRISIL MI&A Research, noted that "Despite single-digit revenue growth, margin has increased on-year consistently for four quarters, indicating a shift in corporate focus toward profitability." He estimated an improvement of approximately 150 basis points on-year for fiscal 2024. Dani also predicted that easing supply pressures and less volatile commodity prices in fiscal 2025 could help India Inc achieve a 50-150 basis points improvement in EBITDA margin.
