Cos revenue growth may decline to 15% during Q2: Crisil

Rating agency Crisil today said corporates' topline growth is expected to decline to around 15% in the second quarter of this fiscal, against 22% in the same period last year, due to high inflation, rising interest rates and slowdown in new investments.

Based on an analysis of the aggregate financial performance of select companies across 21 industries (excluding banks and oil companies), Crisil Research expects year-on-year revenue growth of around 15% against 22% in Q2 of 2010-11.

Revenue growth was 19% in the first quarter of this fiscal.

Sales volumes in consumption-linked and interest rate sensitive sectors such as automobiles, real estate, textiles, and retail have been significantly impacted.

In infrastructure-linked sectors such as cement, capital goods and construction, order book or volume growth has declined, Crisil, Head (Industry and Customised Research) Prasad Koparkar.

"We anticipate this slowdown to manifest in significantly muted topline growth during Q2 FY12," he said.

Although companies have hiked prices, slower volume growth along with high input costs and rising wages, would put pressure on margins.

Crisil expects a 100 basis points (bps) reduction in EBITDA margins in second quarter from 19.5% during the first quarter this fiscal.

Further, with increase in interest rates, net margins are expected to fall even more sharply, it said.

During the second quarter, the rating agency expects real estate players to report a 5% y-o-y decline in revenues and a sharp reduction in EBITDA margins.

Automakers, textiles and steel manufacturers are expected to see a sharp decline in margins on the back of slower offtake and high raw material costs.

For cement and construction players too, EBITDA margins are likely to remain under pressure owing to slowdown in pace of project execution as well as rising input costs.

IT services providers are expected to report buoyant revenue growth of around 17% on the back of strong pipeline, it said.

However, EBITDA margins are likely to decline by around 200 bps due to rising salary costs.