While the global rating agency Moody's has revised the country’s rating outlook to 'positive' from 'stable', a move that has cheered the capital markets, integrated research house Crisil Research has cautioned that corporate India’s revenue growth in the quarter ending March 2015 may be the lowest in the past seven quarters at 2.5 per cent on a y-o-y basis.

The dent in rural demand, which had in the past played a crucial role in propping up corporate performance in different sectors, may likely play spoil sport.

In a release, Crisil Research said it expected India Inc.’s revenue growth to touch a seven-quarter low of 2.5 per cent on a year-on-year (y-o-y) basis in the quarter ending March 2015. The export-oriented and consumer-driven sectors were likely to post moderate growth. But this would be ‘more than offset’ by the weak performance of investment-linked sectors and soft commodity prices globally. Even in the earlier quarter, revenue growth was tepid at 5.4 per cent. But Crisil Research expects a marginal increase in EBITDA margins.

Prasad Koparkar, Senior Director, Crisil Research, said the 2014-15 FY began on a promising note when revenue grew by 12.8 per cent in the first quarter. But this was not sustained in the subsequent quarters when growth decelerated and Q4 was ‘likely to show the lowest growth’. He expected steel, petrochemicals, and man-made fibres manufacturers to be significantly hit by the sharp decline in global commodity prices.

He said the revenue growth of cement companies may be impacted by the sluggish growth in volumes (2 per cent y-o-y). Capital goods manufacturers are likely to take a bigger hit with the revenue falling by a further 13 per cent y-o-y.

Relief will come from domestic consumption and export-oriented sectors that are likely to do better. But this also is selective because the rural consumption story that has been so strong in the past may not be so good this time.

Sectors that were dependent on rural consumption such as motorcycles, tractors, and FMCG are facing volume contraction as rural income had taken a hit because of unseasonal rains and a slow increase in crop prices. This is likely to hurt the topline growth of companies in these sectors.

For instance, the FMCG companies may witness a revenue growth of 8-9 per cent in Q4FY15 as against 14 per cent growth in the first half of the year. Sectors such as IT services, pharma, and auto components may post double-digit topline growth.

Ajay Srinivasan, Director, Crisil Research, expects cement, telecom, petrochemicals and FMCG to do well on profitability. Higher realisations and fall in power costs would push up the EBITDA margins of cement companies by nearly 230 bps while the increase in data revenue and control over marketing costs will help improve the margins of telecom companies by 180 bps. He also felt that the margins of petrochemical players will go up by 125-150 bps due to improvement in polyester feedstock spreads.

However, he anticipated the EBIDTA margins for the steel, capital goods, fertilisers, IT services, and pharmaceuticals sectors will fall for various reasons. While the steel industry will be affected by lower realisations, weak utilisation levels will hit the capital goods sector. The fertiliser sector would be negatively impacted by the rise in ‘raw material cost in complex fertilisers and shutdown of urea plants’, he added.

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