India Inc’s revenue growth will slow down to 9 per cent in the January to March period on base effects, while profit margins will shrink to a 12-quarter low of 18.6 per cent, a report said today.

The pre-tax profit margins will contract by up to 0.70 per cent, but the pace of contraction is now reducing, the research wing of rating agency Crisil said in a report.

The revenue growth for the fourth quarter of the just concluded fiscal year, 2017-18, will be “slightly slow” at 9 per cent as compared to last year, where the waning impact of demonetisation had helped the consumption sector deliver faster growth.

The 9 per cent revenue growth will be driven by the consumption sector itself, excluding telecom, which is witnessing an aggressive play by Reliance Jio, it said.

“Second half of fiscal 2018 will end with a double-digit mark, mainly led by consumption and commodity linked sectors,” its senior director Prasad Koparkar said.

He said while margin pressure continues with higher commodity prices, operating leverage benefits would help cushion the impact to some extent. The study focuses on research of 400 companies across multiple sectors, excluding banking, finance, insurance and oil companies. Starting this week, companies will be reporting their financial performance for the March quarter.

The pre-tax margin will contract for the fourth straight quarter by 0.50-0.70 per cent to 18.6 per cent, which will be the lowest in 12 quarters, it said. However, the pace of contraction will slow down from the 1-2.5 per cent witnessed in earlier quarters. Higher commodity and raw material prices will hurt the power, steel and consumer companies, while the appreciation in the rupee is bound to dent exporters, including those in the information technology and pharma sectors.

The report said profitability of the telecom sector would “drop alarmingly”, by 4.50 per cent on competitive pressures, despite higher data traffic. “The competitive intensity in the telecom industry further intensified since January 2018 after the new entrant started passing on the benefits of the cut in interconnect usage charges to customers through lower tariffs,” it said.