Corporate revenue growth is forecast to ease to 16%-16.5% in the September quarter, with strong passenger vehicle and commodity performance offset by weaker two-wheeler demand and margin pressure.
India Inc’s revenue growth is expected to lose some pace in the September quarter, but not enough to suggest a broad slowdown, according to a new Crisil Intelligence assessment highlighted by News18. The report projects year-on-year revenue expansion of 16% to 16.5% for the July-September period, easing from 17.4% in the previous quarter, while profitability is seen holding broadly steady at the levels recorded in the June quarter.
Crisil said domestic demand remained the main support for corporate sales, with automobiles, power, metals and consumer staples among the biggest contributors. It also pointed to firmer commodity realisations and favourable currency translation effects as helping export-linked businesses, even as the benefits of stronger pricing started to fade in some areas. Separate Crisil Ratings commentary in September said India Inc’s credit ratio improved to 2.18 times in the first half of the fiscal year from 1.50 times in the second half of the previous year, signalling that corporate balance sheets remain resilient despite a mixed operating backdrop.
The clearest signs of unevenness were visible in the automobile sector. Crisil said rural-linked demand appeared to soften in the quarter, with two-wheeler revenue growth slowing sharply to about 12% from more than 36% in the prior quarter, while tractor sales also moderated. Passenger vehicles remained stronger, with revenue estimated to have risen about 24% on the back of around 20% volume growth, premium models and a better product mix. Commercial vehicles were also estimated to have grown around 21%, helped by freight activity, replacement demand and an 18% rise in volumes.
Even where sales were strong, margins came under pressure. Crisil said passenger vehicle Ebitda margins likely slipped by about 2.9 percentage points, while margins in auto components and two-wheelers also weakened as manufacturers chose to absorb more input-cost inflation rather than risk losing momentum in volumes. By contrast, commodity producers saw a notable lift, with aluminium and blast-furnace steel margins improving sharply as realisations strengthened. In steel, domestic flat prices were about 17% higher year on year, though much of the revenue gain came from pricing rather than volume growth.
Consumer-facing and service industries told a similarly mixed story. Crisil estimated FMCG revenue growth of 10.5%, supported by price rises and smaller pack sizes, but margins were likely down by around 100 basis points as higher edible oil and other input costs filtered through. Information technology services posted about 12% growth in rupee terms, though currency weakness appears to have flattered the figures and underlying demand stayed cautious. Airlines were the weakest link, with passenger volumes estimated to have fallen 4% even as fares rose 18%, leaving operating margins more than 1,200 basis points lower amid expensive aviation turbine fuel and capacity constraints. Crisil itself has recently said India’s GDP is likely to expand 6.6% in the current fiscal year, underscoring that corporate revenue is still being supported by a reasonably firm economy even as sectoral pressures diverge.
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