The revenue growth of the Indian corporate sector slumped to a six-quarter low in the March quarter of FY19, a report said. It was weak consumer sentiment and softening of commodity prices that brought about the decline, it further said.
Credit rating agency ICRA analysed the quarterly financial results of 304 companies for this report. It claimed that revenue growth in consumer-linked sectors in the sample was 2.3 per cent in the March quarter of on an annual basis, down from 9.8% in Q3 FY2019. Comparatively, the revenue growth in commodity-linked sectors was at 12.4% in Q4 FY2019 on a Y-o-Y basis, down from 31.0% in Q3 FY2019, the report added.
Indications from auto OEMs and FMCG companies point towards a slowdown in rural growth which can be attributed to a muted rabi harvest, the report further said.
"The weakness in the consumer-linked sectors was visible in the decline in wholesale dispatches of passenger vehicles and two-wheelers in Q4 FY2019 and sequential decline in same-store sales growth of quick-service restaurants and retail chains and even FMCG companies. The decline in consumer sentiments was reported in both urban and rural segments, as reported by Auto OEMs and FMCG companies," said Shamsher Dewan, Vice President - Corporate Sector Ratings, ICRA.
The EBITDA margin of 304 companies in ICRA sampled fell by 78 bps on a yearly basis to 16.8 per cent. However, it reported a 93-bps improvement sequentially on the back of price hikes put into effect by companies in select sectors, lower cost of imports from a stronger rupee, and softening in commodity prices.
"Although commodity prices were higher on a Y-o-Y basis for both FY2019 and Q4 FY2019, there was a softening in prices of key commodities such as oil, steel and aluminium on a sequential basis which supported an improvement in the EBITDA margins on a Q-o-Q basis," Dewan 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 Q4 FY 2018, the ICRA report said. In terms of sector-specific trends, consumer-linked sectors except for FMCG and consumer food reported weak results.