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'Corporates seen nearly doubling Q2 topline'

Friday, September 28, 2018

Led by steel firms, India Inc is likely to double its revenue growth in the second quarter of fiscal 2019, primarily due to base effect, said a report. Corporates are set to log in 12.1% topline growth in September quarter, up from 6.4% in the same period last fiscal year, as steel makers are set to clock an 80 basis point (bps) higher margins, rating agency Crisil said in its report yesterday.

On the flipside, the report said cost pressure is clearly rising across the board. It said aggregate operating margins would be up 5-10 bps in the second quarter, but this would be primarily due to the performance of steel-makers, adding that barring steel, the number is down by around 70 bps.

"If cost pressures continue to rise, the gradual ascent in operating margins seen from the fourth quarter of last fiscal can reverse," the agency said based on its reading of 365 companies.

These 365 companies account for about 65% of the market capitalisation of the NSE. According to Prasad Koparkar, a senior director at Crisil, demand recovery is expected to be driven by discretionary, consumption-led sectors like airlines, automobiles, fast-moving consumer goods (FMCG) and retail.

"While automobiles are expected to see an 18% sales growth, airlines should see passenger traffic rise 16% on-year," he said. Retail, FMCG and automobiles will benefit from the low-base effect caused by the rollout of GST in July last year, Koparkar said.

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