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Revenue growth of India Inc hits six-quarter low in Q4FY19: ICRA
Jun-14-2019

ICRA in its latest report has said that India Inc delivered six-quarter low revenue growth of 10% in the fourth quarter of last financial year (Q4FY19). The low revenue growth was mainly on account of weakness in consumer sentiments and softening commodity prices. The revenue growth in consumer-linked sectors was only 3.8% in Q4FY19 on a year-on-year basis, down from 27.9% in Q3FY19. Commodity-linked sectors revenue growth slowed to 12.4% in Q4FY19 as against 51.4% in Q3FY19. The agency said the Ebitda margin of its sample declined by 44 basis points on a YoY basis and 23 basis points on a quarter-on-quarter basis to 16.6 percent.

However, the report mentioned that several sectors such as airlines, cement, consumer food and consumer durables reported sequential improvement in margins because of price hike initiated by companies in select sectors, lower cost of imports and softening in commodity prices. Besides, the report highlighted that the weakness in the consumer-linked sectors was visible across most consumer-oriented sectors such as passenger vehicles, two-wheelers, consumer durables and FMCG since second half of FY19. The decline in consumer sentiments was visible in both urban and rural segments. 

The rating agency expects the demand in the automobile sector to remain subdued owing to weak consumer sentiments following rising ownership cost, subdued rural demand and tight financing environment given the liquidity constraints in the financial markets. The growth in the sector will start stabilising most likely from the second half of current financial year (FY20) because of pre-buying related to the impending implementation of BS-VI norms from April next year, especially in the CV segment.

Despite the expectation of a slowdown in automobile sales, the auto component industry is expected to grow between 10-11% in FY20 supported by increasing content per vehicle owing to transition to BS-VI and safety norms. Also, In FY20, the cement demand growth is likely to be around 8%, while domestic steel demand growth will moderate to 7%.

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