India Inc's revenue growth dips to 16-quarter low: Report
What's the story
India Inc's revenue growth has slowed to a range of 5-7% in the second quarter (Q2) of FY25, the slowest pace in the last 16 quarters.
The slowdown is mainly attributed to poor performance in construction, industrial commodities, and agriculture sectors.
The data was revealed in a report by CRISIL Market Intelligence and Analytics.
Sectoral performance
Construction and industrial commodities sectors witness sluggish growth
The construction and industrial commodities sectors, which are closely linked to investments, have seen a paltry 1% growth. This has largely affected the overall revenue growth of India Inc.
The agriculture sector, which includes fertilizers and contributes 2% to the sample's revenue, witnessed a sharp decline of 20-22%.
Sectoral growth
IT and pharmaceutical sectors drive EBITDA margin expansion
Despite the overall slowdown, some sectors showed strong growth. Pharmaceuticals, IT services, and consumer discretionary sectors reported robust growth rates.
These sectors led to an overall EBITDA margin expansion of 21-21.5%.
The export segment, which constitutes around 22% of the sample's revenue, witnessed a modest 5% growth while other industries such as aluminum saw a 4% increase.
Financial resilience
Profitability remains resilient despite revenue slowdown
Despite the revenue deceleration, companies' profitability remained resilient with an estimated aggregate EBITDA growth of about 10% in Q2 of FY25.
The EBITDA margin was projected at 21-21.5%.
Among the top 10 sectors representing almost 75% of total revenue, eight experienced EBITDA margin expansion.
CRISIL believes that this margin will improve further by 50-150 basis points over fiscal 2025, due to easing commodity prices and increased volume-based revenue growth.