Corporate revenue to rise by 15 pc in July-Sept, profit likely to fall: Crisil Research

New Delhi [India], October 12 (ANI): Revenues of Indian companies are expected to rise by 15 per cent in the second quarter and their profitability dip by 3 per cent, according to Crisil Market Intelligence & Analytics.
A combination of factors such as moderate price hikes and steadily rising volumes is expected to lift corporate revenue by 15 per cent on-year to Rs 10.2 lakh crore in the second quarter (July-September) of this fiscal, the Crisil report said. Profitability, however, is seen declining 300 basis points due to elevated commodity prices. On a sequential basis, corporate revenue is likely to decline by 3 per cent.
The analysis by Crisil Research was done on the basis of 300 companies which excluded those in the financial services, and oil and gas sectors.
Of the total 47 sectors tracked by Crisil Research, nearly half are estimated to have outpaced overall revenue growth during the quarter, with key sectors within consumer discretionary services logging maximum on-year growth. The underperformance of the remaining sectors compared with overall growth was largely broad-based across the construction-linked, consumer staples, and industrial commodities verticals.
Crisil Research Director Hetal Gandhi said: “Given a relative tapering of growth in the second quarter compared with the first, overall revenue growth for the first half of this fiscal is estimated to be 25 per cent on-year.”
He added that almost 43 per cent of this incremental growth was seen to be contributed by consumer discretionary products and services on a low base of last year as well as price hikes, while metals added another 10 per cent to the incremental revenue.
The Crisil analysis said despite a healthy rise in revenues and realisations of key sectors, companies were unable to completely pass on higher raw material costs. In automobiles, margin expanded amidst better price hikes and utilisation levels, which restricted any further fall. Crisil also said steel makers’ revenue is estimated to have fallen despite healthy demand growth in domestic market on the back of a sharp fall in exports as well as moderation in realisations.
Crisil Research Associate Director Sehul Bhatt: “Rising revenue momentum is not translating into profit margin proportionately. Although key commodity prices such as coking coal and crude oil have cooled sequentially, they remain elevated on-year, eating into corporate profits, with absolute Ebitda profit remaining flattish during the quarter, both on-year as well sequentially. Sustenance of commodity prices at current levels is crucial to limit further margin contraction.” (ANI)