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A spurt in volumes on a low base, coupled with improvement in realisations riding on higher commodity prices, is expected to lift corporate revenue by 15-17 per cent year-on-year to ₹6.9-lakh crore in the fourth quarter of fiscal 2021, a Crisil Research estimate indicates.
The double-digit growth comes after eight quarters of either decline or single-digit growth.
The estimates are based on an analysis of ~300 companies, which account for 55-60 per cent of the market capitalisation (excluding financial services and oil companies) of the National Stock Exchange.
Three key verticals
Hetal Gandhi, Director, Crisil Research, said, “The robust revenue growth rides on a low base of the corresponding quarter a year ago, besides higher government capital expenditure, and higher realisations amid a commodity upcycle, among others. A closer look at the revenue breakup indicates 50 per cent of the recovery is contributed by three key verticals – automobiles, IT services and construction.”
Construction-linked sectors such as steel and cement are estimated to have seen revenue rise 45-50 per cent and 17-18 per cent year on-year, respectively, buoyed by higher realisations and volumes.
A cloud of uncertainty continues to loom over consumer discretionary services. Revenue for players in sectors such as airline services is estimated to drop 30 per cent on-year amid social distancing and cut in discretionary expenses, especially travel budgets. Similarly, revenue for players in media and entertainment is also expected to drop 10 per cent year on-year due to lower advertisement spends and subscriptions.
Mayur Patil, Associate Director, Crisil Research, said, “Demand recovery, higher realisations, and unprecedented fixed-cost reduction measures have enabled a healthy rise in Ebitda margins for six quarters now. However, rising commodity prices will lead to a decline in margins on a sequential basis. Key raw materials – steel, aluminium, natural rubber and crude oil – saw double-digit increase from March 2020 levels. Nevertheless, the low base of last year led Ebitda margins to be over 200 bps higher on-year.”
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