Revenue growth of corporate India could dip by 14-15%

MUMBAI: Revenue growth of corporate India could dip by 14-15% in October-December 2011 from a far healthier 22.5% in the third quarter last year, following a slowdown in consumption growth and investments, said Crisil research report.

Companies could report a 200 basis points decline in earnings before interest, taxes, depreciation, and amortisation (EBITDA) margins in October-December 2011 (Q3 FY12). EBITDA margins are expected to drop to around 17.7% in October-December 2011,'' said Crisil research.

"While the pressure on margins will be felt across industries, textiles, real estate and hotels will see a sharp drop of 300-500 bps, mainly due to slower volume growth and high raw material and wage costs. On the other hand, EBITDA margins for automobiles, steel, and organised retail are likely to decline by 100-200 bps", said Prasad Koparkar, head - Industry and Customised Research, Crisil research.

Airline companies are expected to report robust volume growth, but their EBITDA margins will remain under pressure, as these companies will be unable to fully pass on the sharp rise in fuel costs.

For cement manufacturers and telecom services providers, though volume growth would be muted, increased realizations will lend stability to EBITDA margins, said the Research report.

The depreciation of the rupee will not hurt all of corporate India. IT services companies, bulk drug exporters, pharmaceutical companies that focus on formulations exports, and oil exploration companies with a low proportion of foreign debt on their books will stand to gain from rupee depreciation as their profitability will improve,'' it added.