Rating agency Crisil has forecast that revenue growth for India Inc (excluding financial services and oil companies) is likely to come in at a subdued 7-9 per cent year on year for the quarter ended March (Q4 FY14), reversing the trend seen over the previous two quarters.
“Export-oriented sectors will continue to witness robust revenue growth, led by rupee depreciation, while in infrastructure- and investment-linked sectors, growth will be subdued owing to a weak investment climate,” it said.
Prasad Koparkar, senior director, CRISIL Research said: “Revenue growth rebounded in the second and third quarters of last fiscal, averaging over 10 per cent year on year. However, growth in the fourth quarter will slow to 7-9 per cent. This is mainly due to the high base of the corresponding quarter last year for sectors such as capital goods, real estate, cars & utility vehicles, and one-time benefits such as recovery of past dues and higher incentives in Q4 FY13 for power and coal, respectively.”
Overall revenue growth will continue to be supported by sectors such as IT, pharmaceuticals, ready-made garments and cotton yarn, which benefit from currency tailwinds. Despite its recent strengthening, the rupee’s average exchange rate during the fourth quarter was nearly 14 per cent weaker year on year. Additionally, Crisil said growth momentum in consumption-linked sectors such as telecom, retail and media will sustain.
Crisil said EBITDA margins for the quarter are likely to remain unchanged at 17-17.5 per cent given the continued weakness in investment-linked sectors on account of delays in land acquisition, clearances and project execution. But export-led sectors, along with telecom, should see their margins expand 150-200 basis points (1.5-2 percentage points).
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Net profit margins are expected to be under pressure in Q4 FY14, particularly for construction, real estate, metals and capital goods sectors.