CRISIL on companies’ revenue growth
In a report, ratings and research firm CRISIL has said this year, the revenue growth of companies in consumption-linked categories will widen compared to firms in investmentlinked businesses. It would be 700-800 basis points more than the revenue growth of firms in sectors such as real estate, infrastructure, construction, steel and engineering, CRISIL said on Tuesday.
Revenue growth in sectors such as packaged foods, auto, textiles and agri-products will be almost 700800 basis points more than in sectors such as real estate, infrastructure, construction, steel and engineering
Ratings and research firm CRISIL in its latest report has said that revenue growth of companies in consumption-linked categories will widen in comparison to firms in investment-linked businesses in the current financial year.
The gap will be almost 700800 basis points more than the revenue growth of firms in sectors such as real estate, infrastructure, construction, steel and engineering, CRISIL said in its report released on Tuesday.
While the sales growth of firms in sectors such as packaged foods, auto, textiles and agri-products has surged ahead of those in investment-linked businesses for the last four years, this is the first time the gap will be this high. In the last four years, the gap was in the region of 160-450 basis points, CRISIL said.
The ratings and research firm attributes this widening gap to a likely consumption uptick this an above-normal monsoon. year in the event the monsoon is In contrast, Delhi-based private normal. “If the monsoon is normal forecaster Skymet had said then there will be balanced rains would be normal this year, growth in urban and rural areas. In pegging it at 102 per cent of the the event monsoon is long period average below-normal, urban for June to September. growth will be more Skymet also said there than rural,” D K Joshi, was a four per cent chief economist, margin of error, with Crisil, said. a 16 per cent chance of
India below-normal rains Meteorological this year. Department (IMD) CRISIL said a deficient had said last month or weak monsoon that rains would be will take away below-normal, pegging 50 basis points from it at 93 per cent its gross domestic of the long period product (GDP) forecast average between of 7.9 per cent for June and September. It had also the current financial year. “This said that the probability of a is the worst-case scenario. But, below-normal monsoon was the we go by the assumption that highest at 35 per cent, while it although some monsoon deficiency was 33 per cent for a deficient is predicted in 2015, spatial monsoon, 28 per cent for a normal distribution monsoon and of rainfall negligible couldfor still be normal, leading to a normal agriculture year, as past experience shows,” it said.
The report also said: “For instance, in the last 15 years, there were two years when rainfall deficiency was 7 to 10 per cent — similar to the IMD forecast for 2015 — but in these years agriculture production did not suffer because rainfall was timely and well distributed. Also, the latest forecast is the IMD’s first forecast and more reliable ones will only be available in June.”
The expectation, according to consumer goods analysts, is that the government is likely to intervene in the event monsoon is weak this year, ensuring that rural growth does not slip. This is critical because rural areas have led the consumption growth in most consumer-linked businesses in the last few years even as urban markets slowed down.
While the rate of growth of urban sales has picked up in the last few quarters in categories such as fast moving consumer goods, rural growth is still ahead of urban.