Corporates to report double-digit revenue growth for March quarter

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Mumbai: After eight quarters of either decline or single-digit growth, corporate revenue grew in high double-digits of 15-17% in the March quarter of FY’21 to Rs 6.9 lakh crore, partly because of the low base and better realisation due to higher commodity prices, pushing up their operating profits by a much higher 28-30%, says a report.

With a visible recovery in the second half of fiscal 2021, the overall revenue may be a just 50 bps lower than that of fiscal 2020, according to a pre-earnings forecast by Crisil Ratings on Thursday.

The estimates of 15-17% revenue growth to Rs 6.9 lakh crore in Q4 of FY21 are based on an analysis of 300 companies, which account for 55-60% of the market capitalisation (excluding financial services and oil companies) of the NSE, the agency said, adding operating profit jumped be 28-30% in the quarter.

Low base

The robust revenue growth rides on a low base of the year-ago quarter, besides higher government capex and higher realisations amid a commodity upcycle, among others. A closer look at the revenue breakup indicates 50% of the recovery is contributed by automobiles, IT services and construction, according to Hetal Gandhi, a director at the agency who led the team of analysts.

She also pointed out that this double-digit growth comes after eight quarters of either decline or single digit growth. With a visible recovery in the H2 of FY21, the overall revenue for these 300 companies is estimated at Rs 23.8 lakh crore, which is a mere 0.5% lower on-year.

The growth is led by construction-linked sectors like steel and cement which are estimated to have posted 45-50% and 17-18% on-year revenue rise, respectively, buoyed by higher realisations and volume. Domestic prices of flat steel and cement are estimated to have rose to 32%  and 2%  on-year, respectively.

But the picture is not rosy across verticals. A cloud of uncertainty continues to loom over consumer discretionary services such as airlines which likely to have declined 30% amid social distancing and cut in travel budgets. Similarly, revenue for players in media and entertainment is also expected to have dropped 10% due to lower ad spends and subscriptions.

Earnings before interest, tax, depreciation and amortisation (Ebitda) is estimated to have jumped 28-30 per cent in the quarter, significantly better than revenue growth.