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January 08, 2015
Mumbai
Revenue growth at 6-quarter low in Q3FY15: CRISIL Research
Slower growth in investment, export-oriented sectors and soft commodity prices to blame
CRISIL Research, India’s largest independent and integrated research house, expects India Inc.’s revenue
growth to slip to a 6-quarter low of 7 per cent on a year-on-year (y-o-y) basis in the December 2014 quarter.
This tepid show will be due to weak performance of investment-linked sectors, stable currency exchange rates
(y-o-y) impacting topline growth of export-oriented sectors, and weak global commodity prices. Revenue growth
was around 9 per cent in the preceding quarter and 13 per cent in the December 2013 quarter. On the
profitability front though, we foresee a marginal uptick in EBITDA margins.
Said Prasad Koparkar, Senior Director, CRISIL Research, “Investment driven sectors will drag down
growth. For example, volume growth for top 15 cement companies, accounting for 55 per cent of
industry volumes, will decelerate to 5 per cent in Q3 from 9 per cent in the first half of the year. Capital
goods manufacturers, continuing to grapple with weak order inflows, are likely to report a 9 per cent yo-y decline in revenues. While construction companies will report a slight uptick in topline growth,
growth will still lag aggregate corporate India revenue growth.”
IT service providers are expected to report 10-11 per cent revenue growth y-o-y (in dollar terms) in Q3, similar
to the growth recorded in each of the preceding 6 quarters. However, due to lack of currency tailwinds, rupee
revenue growth will be far lower than in 2013-14. Cotton yarn spinners will be hurt by weak export demand from
China and lower yarn prices, but readymade garment exporters will continue to do well due to healthy growth in
volumes.
The rapid slide in global commodity prices will hurt topline growth of steel, petrochemical, manmade fibres, and
chemical producers. Aluminium, though, will buck the trend, reporting over 30 per cent topline growth led by
better utilisation of new capacities and higher realisations. Among domestic consumption-oriented sectors,
automobile revenues are forecast to grow ~7 per cent (propelled by higher domestic sales of medium & heavy
commercial vehicles). Others forecast to report above average topline growth include FMCG (realisation-led),
telecom (spike in data usage), and pharmaceuticals.
CRISIL Research expects aggregate EBITDA margins to improve by 25-50 bps y-o-y in Q3FY15. Ajay
Srinivasan, Director, CRISIL Research, said, “We expect automobiles, cement, roads, and telecom to
outperform. Margins may rise 70 bps in automobiles, propelled by commercial and passenger vehicle
segments, while margins of component companies could expand by around 120 bps due to higher
utiilisation levels and lower input costs. EBITDA margins of road developers are likely to jump 350-450
bps due to a rise in operational BOT (build operate transfer) projects, while surging data revenues and
control over marketing costs will lift telecom operators’ margins by 140 bps. On the other hand, despite
softer crude oil prices, profitability gains could be limited for companies with raw materials linked to the
crude chain, due to losses booked on inventory previously procured. Central power utilities, coal, IT,
complex fertiliser and paper companies are expected to report lower margins.”
January 08, 2015
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Media Contacts
Analytical Contacts
Tanuja Abhinandan
Prasad Koparkar
Communications and Brand Management
Senior Director, Industry and Customised Research
CRISIL Limited
CRISIL Research
Phone: +91 22 3342 1818
Phone: +91 22 3342 3137
Mobile: +91 98 192 48980
Email: prasad.koparkar@crisil.com
Email: tanuja.abhinandan@crisil.com
Jyoti Parmar
Ajay Srinivasan
Communications and Brand Management
Director, Industry Research
CRISIL Limited
CRISIL Research
Phone: +91 22 3342 1835
Phone: +91 22 3342 3530
Email: jyoti.parmar@crisil.com
Email: ajay.srinivasan@crisil.com
About CRISIL Limited
CRISIL is a global analytical company providing ratings, research, and risk and policy advisory services. We are India's
leading ratings agency. We are also the foremost provider of high-end research to the world's largest banks and leading
corporations.
About CRISIL Research
CRISIL Research is India's largest independent integrated research house. We provide insights, opinion and analysis on the
Indian economy, industry, capital markets and companies. We also conduct training programs to financial sector
professionals on a wide array of technical issues. We are India's most credible provider of economy and industry research.
Our industry research covers 86 sectors and is known for its rich insights and perspectives. Our analysis is supported by
inputs from our network of more than 5,000 primary sources, including industry experts, industry associations and trade
channels. We play a key role in India's fixed income markets. We are the largest provider of valuation of fixed income
securities to the mutual fund, insurance and banking industries in the country. We are also the sole provider of debt and
hybrid indices to India's mutual fund and life insurance industries. We pioneered independent equity research in India, and
are today the country's largest independent equity research house. Our defining trait is the ability to convert information and
data into expert judgements and forecasts with complete objectivity. We leverage our deep understanding of the macroeconomy and our extensive sector coverage to provide unique insights on micro-macro and cross-sectoral linkages. Our
talent pool comprises economists, sector experts, company analysts and information management specialists.
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Last updated: August, 2014
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