India Inc expected to post 12 per cent Q2 growth

New Delhi: Rating agency Crisil Research  expects the corporate revenue growth to grow by around 12 per cent for the quarter ended September 30, 2018.

This would mark the fourth consecutive quarter of double-digit growth. However, the reports doesn’t include two sectors — banking, financial services, insurance (BFSI), and oil companies.

The ratings agency said that the broad-based recovery across consumption-linked sectors, coupled with higher commodity prices, is helping India Inc grow at a faster clip.

“We expect most of the consumption-linked sectors to expand by around 10-15 per cent. The growth will be driven by continued positive momentum in consumer sentiment, a low base effect for certain sectors due to the Goods and Services Tax (GST) rollout in the same quarter last fiscal, and growing rural demand,” Crisil said in its report.

It said that commodity-linked sectors, such as steel products, natural gas and petrochemicals, will likely grow sharply due to increasing realisations.

“High volume-driven growth would continue in cement, led by ramp-up in capacities by several players and greater demand from increased government spending in the urban infrastructure and affordable housing space. We forecast export-linked sectors to get a boost from the sharp depreciation of the rupee this quarter. Improved spending in the United States (US) market and growth in specific categories will help information technology (IT) services,” said Crisil Research.   

It said that growth would be led by improving domestic demand for pharmaceuticals, even though constrained by continued pricing pressure. Textiles, specifically cotton yarn, and the two-wheeler segment are also expected to be buoyed by better demand from key export markets.

“Conversely, we expect sugar and telecom services to be negatively affected due to pricing pressures in their respective markets,” said the agency.

On automobiles, Crisil said it expects revenue of key auto segments such as commercial vehicles, passenger vehicles and two-wheelers to grow at a robust pace.

This is as volumes improve due to better domestic demand, supported by export growth for cars and two-wheelers.

“A change in product mix towards higher-priced vehicles is also aiding realisation growth. CV revenue is expected to grow by around 17 per cent, followed by cars at round 6-8 per cent.”