India Inc revenue growth in Q4 hits six-quarter low of 10.7% on weak consumer spending, softening commodity prices

From profitability perspective, operating margins also narrowed 0.78 percent to 16.8 per cent during the period, but were up 0.93 percent on lower commodity prices and price hikes

Press Trust of India May 27, 2019 16:13:18 IST
India Inc revenue growth in Q4 hits six-quarter low of 10.7% on weak consumer spending, softening commodity prices
  • For the consumer companies, the revenue growth declined to 2.3 percent for March quarter 2018-19

  • The weakness in the consumer-linked sectors was visible in the decline in wholesale dispatches of passenger vehicles

  • The commentary on rural growth from auto OEMs and FMCG companies too indicates a slowdown in growth

Mumbai: Weakness in consumer spending and softening commodity prices have led India Inc to deliver six-quarter low revenue growth of 10.7 percent for January-March period, a report said Monday.

From profitability perspective, operating margins also narrowed 0.78 percent to 16.8 per cent during the period, but were up 0.93 percent on lower commodity prices
and price hikes, rating agency Icra said in the report.

The agency analysed the results of 304 listed entities while arriving at the aggregate.

It said for the consumer companies, the revenue growth declined to 2.3 percent for March quarter, 2018-19, down from 9.8 percent in the preceding quarter, while the same for companies in the commodity-linked sectors was 12.4 percent as compared to 31 percent.

India Inc revenue growth in Q4 hits sixquarter low of 107 on weak consumer spending softening commodity prices

Representational image. Reuters

The weakness in the consumer-linked sectors was visible in the decline in wholesale dispatches of passenger vehicles and two-wheelers and sequential decline in same-store sales growth of quick service restaurants, retail chains and FMCG companies, its Vice President Shamsher Dewan said.

He added both urban and rural segments witnessed a decline in consumer sentiment as reported by auto and fast moving consumer goods (FMCG) companies.

The commentary on rural growth from auto OEMs and FMCG companies too indicates a slowdown in growth which can be attributed to a muted rabi harvest, the note said.

The interest coverage ratio adjusted for sectors with low debt levels like IT, FMCG and pharmaceuticals witnessed a decline to 3.8 times from 4.7 times in the year-ago period, it said, attributing it to lower growth in operating profits.

It can be noted that some companies are yet to report their Q4 numbers. The official data on GDP growth will be coming out towards the end of May.

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