The credit rating agency counts high base effect as main cause for the slowdown.
Corporate revenue growth is expected to print at 12-13 per cent on-year for the third quarter of this fiscal ended 31 December 2018, or 400-500 basis points lower than ~17 per cent on an average in the first two quarters, says a report by the credit ratings agency Crisil.
Growth in operating profit (EBITDA), is also expected to print lower, at just below 10 per cent on-year compared with ~15 per cent over the three preceding quarters, it said.
India Inc is expected to report a margin contraction of ~50 basis points (bps) on-year for the quarter amid rising raw material costs across sectors.
Says Prasad Koparkar, Senior Director, Crisil Research, “Commodity and infrastructure-linked sectors are expected to support revenues for the quarter ended December. Steel, cement, natural gas and petrochemicals are expected to be driven by volume and/or realisation growth, while sectors such as construction and capital goods are expected to grow on a pickup in execution of key infrastructure-led government schemes. In consumption spending-led sectors such as airline services and retail, revenues will be supported by positive demand sentiment, while in export-oriented segments such as IT services and pharma, the boost would come from a weak rupee on a y-o-y basis.”
However, overall revenue growth will be constrained by a demand slowdown in automobiles, sugar, aluminium and telecom services. Automobiles revenue is expected to have been impacted by a rise in ownership costs, while the other sectors would bear the impact of lower realisations and competitive pressures.