India Inc likely logged a 4-6% revenue growth in January-March, marking the slowest quarterly growth since recovery from the Covid-19 pandemic began in September 2021, our analysis of ~350 companies (excluding financial services and oil and gas sectors) indicates.

The moderation, though, follows stronger growth in previous years and is, hence, on a higher base. Among the 47 sectors monitored by CRISIL, only 12 are expected to have clocked an improvement in revenue growth both sequentially and on-year for the quarter.

Consumer discretionary products and services likely led the show in the quarter. Among discretionary products, the automobiles sector was steered by healthy growth in passenger vehicles on the back of higher volumes and price hikes in the past year. The organised retail sector grew for the thirteenth quarter in a row, on healthy urban demand. Discretionary services, such as airlines and hotels benefited from MICE1, weddings and corporate travel segments rebounding.

At the other end, revenue from construction-linked sectors likely grew at a tepid pace, essentially on account of a high base of the fourth quarter of fiscal 2023 that saw construction companies achieving their highest quarterly revenue. In the cement sector, despite steady demand momentum during the quarter, revenue growth remained moderate as prices were under pressure amid higher supply and intense competition.

Says Miren Lodha, Senior Director, CRISIL MI&A Research, “Even with slower revenue growth in March Quarter, corporate revenue is estimated to have grown ~8% in fiscal 2024. In fiscal 2025, revenue growth should improve to 9-10%, driven by sectors less dependent on commodities and largely catering to the domestic market. Consumer discretionary segments, comprising both goods and services, will grow despite easing of the postpandemic release of pent-up demand. Growth in the consumer staples segment will pick up pace owing to resumption of rural demand.”

On the margin front, an improvement of 100 bps is estimated on year in the March quarter. Overall earnings before interest, tax, depreciation and amortisation (Ebitda) margin for ~350 companies continued to expand through fiscal 2024.

Consumer discretionary services and export-linked sectors likely led the margin expansion. In consumer discretionary services, margins for telecom services rose on account of lower licence fee, spectrum charges and network opex, alongside increasing subscriber base and average revenue per user. Information technology services and pharmaceuticals—both dependent on exports—clocked their fifth straight quarter of margin expansion.

Conversely, the steel sector, a construction-linked commodity, likely logged an on-year decline in margin in March quarter as import pressures led to a decline in prices.

Says Aniket Dani, Director, CRISIL MI&A Research, “Despite single-digit revenue growth, margin has increased on-year consistently for four quarters, indicating a shift in corporate focus towards profitability. An improvement of ~150 bps on-year is estimated for fiscal 2024. As supply pressures ease, commodity prices are likely to be less volatile in fiscal 2025, helping India Inc log a 50-150 bps improvement in Ebitda margin. Sectors such as consumer staples, discretionary products and industrial sectors, which make up 52% of corporate India's Ebitda, are expected clock the highest margin expansion.”

¹ Meetings, incentives, conferences and exhibitions