Revenue growth of India Inc likely declined 80-90 basis points (bps) on-year to 4-6% in the three months ended December 2024 as the construction segment, which accounts for a fifth of overall revenues, dragged because of an extended monsoon and slower recovery in government spending after the general elections, while the industrial commodities and investment-linked segments had a subdued outing.

However, on a sequential basis, revenue improved to 5.2% compared with 2.4% in the July-September quarter.

An analysis of 400+ companies that account for almost half of the listed market capitalisation, indicates as much.

Profitability is seen up 40-50 basis points (bps), driven by export-linked sectors, with earnings before interest, tax, depreciation and amortisation (Ebitda) likely rising ~8%.

Says Pushan Sharma, Director-Research, Crisil Intelligence, “Among the top 10 sectors that account for ~70% of overall revenue, four likely saw Ebitda margin expansion, led by export-linked sectors such as IT services and pharmaceuticals, investment-linked sectors such as power, and construction. Steel, automobiles, telecom, FMCG, cement and auto components sectors may have logged margin contraction.”

Revenue of the construction, industrial commodities and investment-linked verticals — collectively accounting for ~38% of our sample set — likely dipped 1%. Among construction-linked sectors, steel revenue fell 7-8% despite healthy demand as imports from China weighed down prices, while cement likely saw a muted 1-2% growth on a high base and lower realisations following consolidation.

Among industrial commodities, coal likely logged ~1% growth as e-auction premiums fell despite higher demand for heating. Telecom services (17%), aluminium (22%) and automobile (7%) are expected to see industry-beating growth on tariff hikes, higher global prices and rural recovery, respectively. Among investment-linked sectors, power (~65% of the sector) likely grew 2-3% on strong demand as industrial activities resumed after monsoon.

Consumer discretionary, staple products and services (~35% of the sample set’s revenue) likely logged 9-10% on-year revenue growth, led by ~17% jump in telecom services revenue following sharp tariff hikes and increased data consumption stemming from rising penetration in the rural areas.

The automobile sector’s revenue likely grew ~7% due to a rise in the volume of cars sold, supported by healthy festive demand and higher realisations due to a change in the product mix and increasing share of exports. Retail sector growth continued, supported by festive sales.

In fast-moving consumer goods (FMCG), the staples segment is expected to log 6-8% revenue growth driven by price hikes amid muted demand. While demand recovery in hinterland is expected to sustain, the urban side is expected to remain subdued next quarter as well.

Says Elizabeth Master, Associate Director-Research, Crisil Intelligence, “The exports-linked segments (~22% of our sample set) likely saw revenue rise ~5%, with IT services (~72% of the sector) clocking only 3-4% growth on deferral of projects, mainly in the US and in the banking, financial services and insurance space. The pharmaceuticals sector may have grown 12% on sustained strength in exports to regulated markets and growth in the domestic market.”

Agriculture (around 2% of our sample set) likely clocked 6% growth on higher consumption of fertilisers, good monsoon and expanded rabi acreage.

The ‘others’ vertical (~3% of the sample set), may see 17-18% growth. Aluminium (contributing to ~86% of category revenue) likely grew 22%, with improvement in global prices and increase in premiums of major export destinations. While on the domestic front demand was driven by the increased traction from the automobiles sector boosted by the festive season.

IT companies likely saw Ebitda margin expand 70-80 bps due to higher employee utilisation and lower attrition rates. The pharmaceutical sector’s margin is seen rising 140-150 bps on moderated input costs.

Among investment-linked sectors, a fall in prices of imported coal prices lowered the cost of power purchased and is expected to lead to 450-460 bps margin expansion for generation companies.

In the steel sector, while prices of coking coal dipped, that of iron ore rose, which could mean margin contraction of 120-140 bps. The cement sector margin likely contracted 450-470 bps on lower realisations despite easing cost pressures. The consumer staples vertical’s margin narrowed likely to 22% following 80-100 bps decline in margin of the FMCG sector (~80% of revenue contribution in this category), due to increase in input costs of palm oil and tea.