India Inc revenue likely to grow 5-6% in Q1: Crisil

EBITDA margins, which have also bottomed out, are estimated to remain stable at 18.5% (y-o-y) in the first quarter

Revenues of Indian companies, excluding those engaged in banking and oil, are expected to grow marginally at 5-6% in the first quarter of this fiscal, Crisil Research said today.

Operating margins, however, are likely to remain stable in Q1, 2013-14 at 18.5%.

"India Inc's revenues excluding banks and oil & gas companies are likely to grow at 5-6% (y-o-y) in the April-June 2013 (Q1, FY'14). While this is only a marginal improvement, at least the sharp drop witnessed over the last five quarters is expected to be curtailed," Crisil said.

EBITDA (earnings before interest, taxes, depreciation, and amortisation) margins, which have also bottomed out, are estimated to remain stable at 18.5% (y-o-y) in Q1 FY'14, according to the Crisil report.

Revenue growth will be muted at 5-6% in Q1 FY14, with half of the 28 key sectors (excluding banks, oil and gas companies) including steel, coal, fertilisers, shipping, airlines, hotels and sugar, estimated to either witness a low single-digit growth or decline in revenues on a y-o-y basis, due to pressure on volumes.

The Indian companies are expected to announce Q1 results later this month.

According to Crisil, the revenue growth in FY14, however, is expected to be much higher at 10-11%, driven by consumption led recovery in the economy, on the back of a normal monsoon and pre-election spending by the government.

"Revenue growth plummeted to 4.4% in Q4 FY13 from 18% in Q4 FY12. Going forward, revenue growth will be tepid, but not decelerate further. While volume growth will continue to remain under pressure, sectors like automobiles and FMCG are expected to benefit from a favourable change in product mix," Crisil Research President Mukesh Agarwal said.

The rupee depreciation will lend some support to export- oriented sectors. Even as the investment cycle will be weak, capital goods, construction, steel and cement are not expected to witness further downside with the anticipated increase in GDP growth, Agarwal said.

Operating margins have also bottomed out and are expected to remain rangebound from hereon. In Q1 FY14, margins are estimated to be stable y-o-y at 18-18.5%. A drop in the prices of input commodities will result in margin expansion for power, tyres and FMCG while rupee depreciation will lend support to IT services and readymade garments, where realisations are under pressure, Crisil Research Senior Director Prasad Koparkar said.