‘India Inc rev growth to hit 6 qtr low’

“Accordingly,Ebidta (earnings before interest,taxes,depreciation and amortisation) margins are projected to decline by 100-150 basis points (bps) or 1-1.5 percentage points on a y-o-y to 19-20 per cent,but remain flat compared sequential (Q4 of FY12),” Crisil said today.

The report is based on the analysis of aggregate financial performance of 247 large companies across 26 key sectors,excluding banks and oil & gas companies and constitute around 65 per cent of the BSE 500 Index.

“The revenue growth in Q1 FY13 is expected to be much weaker due to a sharp deceleration in airlines,auto components,commercial vehicles,hotels,metals,organised retail,real estate and textiles,” said the report.

Although,overall Ebidta margins are expected to remain flat in Q1 on a q-o-q basis,15 of the 26 sectors will continue to face margin pressure,said the agency.

“For sectors like commercial vehicles,cement,construction and real estate,Ebidta margins are set to contract by 100-200 bps q-o-q,due to slower demand growth and high input costs,” said Crisil Research senior director for industry and customised research Prasad Koparkar.

On the other hand,export-oriented sectors like IT services and pharma are expected to report strong q-o-q margin expansion aided by a 7.4 per cent q-o-q fall in the rupee,the agency said.

The telecom sector is expected to see a modest expansion in margins on account of lower competition coupled with cost control measures adopted by the companies.

Citing reasons for this record slump,Crisil Research president Mukesh Agarwal said,”While policy logjam and higher cost of capital have severely dented the investment cycle,persistent inflation,economic uncertainty and lending rates are weighing on consumer sentiment,thereby affecting consumption growth.

“We believe demand growth will continue to remain weak going forward,as interest rates are likely to remain high for longer than anticipated. The deceleration in fixed capital investments growth may lead to further slowing of consumption demand.”

The agency also said reflecting weak demand due to the ongoing slowdown,y-o-y revenue growth in Q4 of FY12,moderated slightly to 17.2 from 17.7 per cent in the same quarter previous year. Ebidta margins,meanwhile,fell 270 bps y-o-y,which however was higher by 35 bps q-o-q,largely due to strong seasonal performance by commercial vehicles,construction,power,cement and sugar sectors.

Accordingly,net margins rose by 90 bps q-o-q,supported by the decline in depreciation charges.

Depreciation charges as a percentage of revenues fell to its lowest level in the last 10 years while growth in fixed asset creation was at its lowest in the last five years,reflecting the sharp deceleration in the investment cycle,said the agency.