Corporate revenues likely to grow only 1.6% in Sept quarter: Crisil

New Delhi: Corporate revenues are likely to grow by a meagre 1.6 percent for the quarter ended September, which will be the fifth consecutive quarter of single-digit growth, Crisil Research said Wednesday.

Fragile consumption demand, especially in the rural areas, weakness in investment-linked sectors and the meltdown in global commodity prices will more than offset the healthy topline growth expected in the export-oriented sectors, it said.

"Crisil Research expects revenues of corporates to grow barely 1.6 percent year-on-year in the three months ended September 30, 2015, marking the fifth consecutive quarter of single-digit growth," it said in a release.

EBITDA (earnings before interest, taxes, depreciation and amortisation) or operating profit growth is expected to be just 2 percent, Crisil said.

The analysis is based on 600 companies (excluding financials and oil & gas), which account for 70 percent of the market capitalisation of the NSE.

"However, revenue growth is expected to improve in the second half of the current fiscal following a mild uptick in consumption, increased government spending, and the statistical low-base effect.

Despite this, revenue and earnings growth for the entire fiscal is likely to remain in single digits and well below consensus estimates, said the release.

"Export-linked sectors will be the only bright spot in terms of topline. Though merchandise exports have been declining for several months now, listed exporters (primarily in the IT services and pharmaceuticals sectors) are expected to grow at around 13 percent in the September quarter, helped partly by the 7 percent depreciation in the rupee," said Prasad Koparkar, Senior Director, Crisil Research.

Domestic consumption-driven sectors with high dependence on rural consumption will be impacted by tardy growth in rural income, below-normal monsoon and poor pricing power, he said.

The research said FMCG companies are likely to post 6-7 percent revenue growth, down from 12% in the last fiscal.

In contrast, sectors more focused on urban consumers such as multiplexes, retail, and telecom are projected to post healthy double-digit topline growth.

Aggregate revenues of commodity-linked sectors (steel, petrochemicals, and man-made fibres) are expected to decline by 14 percent, it added.

While public investments have started to gain traction, this is yet to reflect in the performance of investment linked sectors because of over capacity and weak demand in end-use sectors such as real estate, Crisil said.

Cement and construction companies are projected to post 2-3 percent topline growth, while capital goods manufacturers are likely to see a decline of nearly 7 percent.

"Power offtake, too, remains subdued due to poor financial health of state discoms and weak economic activity, which will curb topline growth for generation companies."