India Inc Won’t be Proud of this Q4
Crisil report expects corporate EBITDA to rise by 7% due to higher gross margins but revenue growth to stay at around 2%
Mumbai: Indian companies could record the fastest growth in earnings before interest, taxes, depreciation and amortisation (EBITDA) in six quarters in the quarter ended March 2016 but revenue growth will continue to lag due to weak investment demand, patchy recovery and intense competition, said Crisil Research, an arm of rating agency Crisil.
Crisil research expects corporate EBITDA to increase by around 7% in the quarter to March, driven by higher gross margins because of lower commodity prices. However, revenue growth will languish at around 2%. The research company analysed 600 companies that account for 70% of market capitalisation of the National Stock Exchange.
Monsoon remains crucial for corporate revenue in the fiscal year ending March 2017, Crisil said, though not in double digits.
“Net profit growth is expected to accelerate and be in the range of 12-15% owing to higher topline growth, improvement in EBITDA margin, subdued working capital requirement and lower interest cost,” Crisil said. Crisil expects automobiles, consumer goods, pharmaceuticals, cement and or- ganised retail to outperform in fiscal 2017 with a reduction in imports and a pick-up in global demand helping large steel players. “The modest improvement in performance in the March 2016 quarter would be driven by a handful of sectors. Information technology service providers are likely to post around 14% rupee revenue growth, driven by volume growth and 8% depreciation in the rupee against the dollar,” Prasad Koparkar, senior director at Crisil Research, was quoted in the report. Koparkar also expects auto companies to do well in the quarter ended March driven by strong domestic sales.