Bleeding telcos, input cost to cap Q2 scorecard for India Inc

"Had it not been for telecom, India Inc would have grown over 8 per cent this quarter on the back of a 10-12 per cent growth in select consumption driven sectors like auto, airlines, retail, media," Crisil said in a report today.

Agency's senior director Prasad Koparkar said the analysis does not include the performance of the banking and finance companies and oil & gas.

This will be the seventh straight quarter of a rangebound revenue growth in the 6-8 per cent level, the report said, adding on the profitability front, it expects a shrinking of up to 150 bps in the margins on rising input costs and pricing pressures.

It said margins in sectors like automobiles, tyres and chemicals can drop by up to 2.50 percentage points on higher commodity prices for steel, aluminium and crude oil.

"Ebidtda margins could fall for 12 of the 21 key sectors. However, better revenue growth will ease pressures from the previous quarter when 16 key sectors had seen a dip in margins," director Hetal Gandhi said, adding telecoms, pharma and IT services will see the sharpest fall in margins.

On the revenue front, fast moving consumer goods sector will report a dip on delayed restocking post-GST, while export linked sectors like as IT and pharma will continue to disappoint on factors like rupee appreciation and rising protectionism in key markets.

It said rural demand will pick up during FY18, driven by favourable monsoon, farm loan waivers and higher minimum support price for crops.

With no meaningful pick-up in private investments expected over the next few quarters, revenue growth of India Inc will continue to remain muted for the year, it said.

Higher commodity prices and structural headwinds in sectors such as telecom and pharma along with continued muted revenue growth would keep margin pressures alive for the year, it added.