Indian Inc’s Revenue Growth Slows Down, But Profitability Remains Strong
In the July-September quarter, Indian Inc experienced a slowdown in revenue growth, marking the slowest pace in the past 16 quarters. The growth rate stood at 5-7%, according to CRISIL Market Intelligence and Analytics. The construction and industrial commodities sectors grew by only 1%, impacting overall revenue. Agriculture, including fertilizers, saw a significant decline of 20-22%.
The export segment, which makes up about 22% of the sample, grew by 5%, while the ‘others’ category, including aluminum, grew by 4%. Despite the revenue slowdown, profitability remained strong. Elizabeth Master, Associate Director-Research at CRISIL, noted that among the top 10 sectors, eight saw EBITDA margin expansion, led by IT services, pharmaceuticals, power, and consumer discretionary sectors like automotive and telecom services.
Steel and cement sectors faced margin contraction due to higher iron ore prices and subdued pricing, respectively. Consumer discretionary, staples, and services sectors posted a robust 15% growth, contributing to 36% of the sample’s revenue. The analysis estimates that aggregate EBITDA grew by about 10% in the second quarter of fiscal year 2025, with margins at 21-21.5%.
Looking ahead, margins are expected to improve by 50-150 basis points over fiscal 2025, driven by easing commodity prices and increased volume-based revenue growth.
Doubts Revealed
Indian Inc -: Indian Inc refers to Indian Incorporated companies, which are businesses that are officially registered and operate in India. These companies can be in various sectors like technology, agriculture, or manufacturing.
Revenue Growth -: Revenue growth is the increase in the amount of money a company earns from its business activities over a period of time. It shows how well a company is doing in terms of sales.
July-September quarter -: The July-September quarter is a three-month period in a year, also known as the second quarter of the financial year in India. Companies often report their financial performance for this period.
EBITDA -: EBITDA stands for Earnings Before Interest, Taxes, Depreciation, and Amortization. It is a measure of a company’s overall financial performance and profitability.
Margin Expansion -: Margin expansion means that a company is making more profit from each unit of sale. It indicates that the company is managing its costs well and increasing its profitability.
Fiscal 2025 -: Fiscal 2025 refers to the financial year that will end in 2025. In India, the fiscal year starts on April 1st and ends on March 31st of the following year.