While India Inc is growing in revenue terms, the growth rate has taken a hit. According to Crisil, revenue grew 19-21 percent in FY23, slower than the 27 percent growth reported in FY22. The analysis also estimates the growth rate to fall further in FY24 – to be at 10-12 percent – nearly half of the growth rate pegged in FY23.
Meanwhile, the operating margin is likely to have moderated by around 300 basis points (bps) in FY23. This is due to high energy and metal prices during earlier quarters and moderation in global demand is likely to have put downward pressure on the margin.
Exports-linked and industrial commodities verticals remained underperformers due to a slowdown in demand following recessionary pressures across the globe.
The analysis was based on studying the data of over 300 companies (excluding those in the financial services and oil & gas sectors).
Revenue is expected to grow 10-12 percent this fiscal despite a global slowdown and interest rate hikes, essentially led by domestic consumption.
On a year on year basis, it is likely that the revenue growth rate will halve to 10-12 percent from 22.8 percent in the fourth quarter of fiscal 2022. It stressed that the ‘revenue deceleration was not broad-based, but continued to be driven by commodities and sectors relying heavily on exports’. Power and Pharmaceuticals sectors are estimated to drive the growth.
The revenue growth rate was at 39.1 percent in Q1FY23, which fell down to 21.2 percent in Q2FY23, to 15.1 percent in Q3FY23, to 11.4 percent in Q4FY23 (as per estimates).
Of the 47 sectors analysed, revenues of the commodities and export-oriented sectors, such as textiles, gems & jewellery, and information technology-enabled services, declined on-year, Crisil analysis stated.
Aniket Dani, Director-Research, CRISIL Market Intelligence and Analytics, said, “Revenue growth during the March 2023 quarter is likely to have been led by consumer discretionary products such as airlines, hotels, media & entertainment, and retail, while demand for consumer staples such as pharmaceuticals and fast-moving consumer goods (FMCG) continued its growth momentum.’’
“In contrast, export-linked sectors such as cotton yarn and readymade garment (RMG), gems & jewellery, and aluminium and steel products bore the brunt of a slowdown in key markets.’’
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