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India Inc's revenue to rise 15-17% YoY in Jan-Mar: CRISIL

While the volume gains in January-March are attributable to low base of March 2020, there has also been a sequential recovery in demand across sectors.

India Inc's revenue to rise 15-17% YoY in Jan-Mar: CRISIL

Sequentially, revenue is seen up 6-7 per cent in January-March quarter.

The recovery seen by the Indian companies in October-December quarter is likely to continue in January-March, with revenue of 300 listed companies, excluding banking, financial services and insurance (BFSI) and oil companies, rising 15-17 per cent year-on-year to Rs 6.9 lakh crore, CRISIL said in a report.

"However, not all sectors are expected to grow, with a cloud of uncertainty continuing to loom over consumer discretionary sectors. Revenue in sectors like airline services is estimated to drop by about 30 per cent on-year, owing to social distancing measures to contain the spread of the pandemic as well as constrained disposable incomes," the report said.

CRISIL said there has been a recovery across sectors, led by higher volumes and commodity prices. Sequentially, revenue is seen up 6-7 per cent. The aggregate revenue of about 460 companies, excluding those in financial services and oil sector, had increased about 5 per cent on-year in the third quarter of fiscal 2021, compared with a 2 per cent decline in the previous quarter.

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While the volume gains in January-March are attributable to low base of March 2020, as a nationwide lockdown was imposed in the last week of March last year to control the spread of coronavirus infections, there has also been a sequential recovery in demand across sectors. "Among the sectors expected to perform well, steel products, construction and cement, which are construction linked, are forecast to grow 30-32 per cent on-year, aided by higher realisations, coupled with an increase in infrastructure activities on a low base," CRISIL said.

Driven by a low base, higher wholesale sales volumes, and higher realisations led by implementation of Bharat Stage-VI (BS-VI) emission norms, automobile industry is expected to record a growth of 45-47 per cent on-year. This, in turn, is expected to have driven growth for ancillary segments such as auto components and tyres which are estimated to grow 26-28 per cent on-year.

Despite the growth in January-March quarter, the overall revenue for the 300 companies in fiscal year 2020-21 is estimated to decline 0.5 per cent on-year to Rs 23.8 lakh crore.

Sector-wise, pharmaceutical manufacturers are expected to grow 7-9 per cent on-year in March quarter, led by export demand from the US and Europe, and accrued benefit from the global de-risking of supply chains from China. IT services is seen growing 6-7 per cent on-year, aided by robust demand for digital services and rupee depreciation of about 2 per cent on-year.

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"Similarly, petrochemical company revenue is expected to have increased 40-45 per cent on-year, supported by an increase in realisations, led by rise in feedstock crude oil and naphtha prices (about 21 per cent on-year increase). Further, demand is expected to improve on the low base of the fourth quarter of fiscal 2020," CRISIL said.

The revenue for airline companies is expected to plummet 30-35 per cent on-year in January-March on an aggregate basis due to a significant decline in domestic passenger traffic on account of the pandemic. "A further drop in revenue will be restricted as fares are expected to record an 8-12 per cent on-year rise due to extension of the lower and upper price caps introduced by the DGCA and an upward revision of the fare bands by 10-30 per cent."

In terms of EBITDA (earnings before interest, tax, depreciation and amortisation), CRISIL sees a 28-30 per cent improvement at an aggregate level in the fourth quarter of fiscal 2021. However, sequentially, EBITDA growth is estimated to be flat due to rising commodity prices.

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