Press Release
October 10, 2016 | Mumbai
Q2 revenues seen up 7%, the second-best in 6 quarters
Base effect, tailwind from low commodity prices to provide fillip: CRISIL Research
CRISIL Research, India’s largest independent and integrated research house, expects revenues of companies in
key sectors -- excluding BFSI and oil companies -- to rise 7% (on-year) in the second quarter of the current fiscal.
That would be the second-best showing in six quarters. Ebidta, or operating margin, is seen up 50 basis points
(bps).
The fillip comes from low-base effect (revenue growth in the corresponding quarter last fiscal was stagnant),
improvement in urban and rural consumption, and low commodity prices.
The analysis is based on 360 companies (excluding financials and oil companies) that account for ~46% of the
market capitalisation of the National Stock Exchange.
Aggregate revenue growth for these companies in four of the past six quarters hovered between 0% and 2%. In
the first quarter of this fiscal, it was 6% compared with 9% in the last quarter of fiscal 2016. Ebidta margin had
risen 70bps on-year in the first quarter.
The past 12 months have seen companies from the automobiles, IT services, pharmaceuticals, power, and
telecom services sectors outperform in terms of revenue growth.
Says Prasad Koparkar, Senior Director, CRISIL Research: “In the second quarter, we expect sectors
focused on urban and rural consumption such as automobiles and retail, along with pharmaceuticals and
IT services, to record double-digit revenue growth. We see automobiles reporting 13% growth riding on
new launches and healthy rural demand following a good monsoon. Retail is expected to grow 12% on
the back of improvement in disposable incomes and India’s economic outlook, while pharmaceuticals,
driven by new launches in the US, should see 13% growth. IT services sector is expected to grow 10%,
slower than in the past, aided by volume and rupee depreciation.”
Consumer discretionary sectors such as airlines, cars and two-wheelers and retail are expected to grow faster
than industry because of improved volumes. Cars and two-wheelers are expected to grow 16-18% and 13-15%,
respectively, due to new model launches and improved demand, including rural. Boosted by same-store sales
growth and store additions, revenues of retailers are expected to increase 12% during the festive season. The
aggregate revenue of airlines is seen up 7-9% on strong growth in domestic passenger traffic.
In the first quarter, operating margins had improved on lower input prices. Global prices of coking coal and
domestic prices of iron ore fine were down 24% and 7%, respectively, which helped the steel products industry
improve operating margins by 500 bps. For power companies, cheaper fuel lifted operating margins by 200 bps.
Says Binaifer Jehani, Director, CRISIL Research: “During the second quarter, automobiles, steel
products, telecom services and FMCG companies are expected to improve their Ebidta margins. For steel
products makers, it is seen up 150 bps riding on a 2-4% increase in prices. For auto makers, we see it
rising 125 bps. For FMCGs, it should rise 80 bps with input costs, especially crude oil and copra prices,
declining.”
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For further information contact
Media Relations
Analytical Contacts
Shamik Paul
Prasad Koparkar
Media Relations
CRISIL Limited
D: +91 22 3342 1942
M: +91 99 208 93887
B: +91 22 3342 3000
[email protected]
Senior Director
CRISIL Limited
B: +91 22 3342 3000
[email protected]
Khushboo Bhadani
Binaifer Jehani
Media Relations
CRISIL Limited
D: +91 22 3342 1812
M: +91 72 081 85374
B: +91 22 3342 3000
[email protected]
Director
CRISIL Limited
B: +91 22 3342 3000
[email protected]
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CRISIL Research is India's largest independent integrated research house. We provide insights, opinion and analysis on the
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