India Inc revenue growth accelerates to 22 pc in Q1
New Delhi, Aug 13
India Inc's aggregate revenues grew 22 per cent year-on-year in the June quarter of FY27, accelerating from 13 per cent growth in the previous quarter, driven by commodity price inflation, strong consumption and sustained demand in sectors such as automobiles, a report said on Thursday.
According to an ICRA report, the sharp improvement was driven by higher commodity and bullion prices, continued demand support from last year's GST rate cuts that benefited the automobile sector, and resilient consumer spending despite concerns related to tensions in West Asia and the impact of El Nino.
Despite robust revenue growth, profitability came under pressure. Aggregate operating profit margins (OPM) contracted by more than 200 basis points year-on-year during the quarter, while net profit growth remained largely flat.
The weakness was mainly attributed to the oil refining sector, where elevated crude oil prices and losses on LPG and petroleum product sales weighed on earnings.
Excluding the oil and gas sector, however, the picture was considerably stronger. Operating margins remained stable at around 19 per cent, while net profits increased by more than 20 per cent year-on-year.
ICRA noted that consumption-linked sectors emerged as key growth drivers during the quarter.
Automobile original equipment manufacturers (OEMs) recorded the strongest revenue growth, while fast-moving consumer goods (FMCG), consumer durables, apparel and grocery retail, jewellery retail and quick-service restaurant chains also reported healthy performance.
Commenting on the trends, Jitin Makkar, Senior Vice President and Group Head-Corporate Ratings at ICRA, said concerns about a potential demand and cost shock at the start of the quarter eventually had only a limited impact on business performance.
"Though concerns over a demand-and-cost shock weighed on sentiments at the beginning of the quarter, the eventual impact was limited. Consumption-led sectors were among the key growth drivers," he stated.
"While automobile original equipment manufacturers (OEMs) recorded the strongest revenue growth, several other consumer-oriented sectors including FMCG, consumer durables, apparel and grocery retail, jewellery retail and quick-service restaurants also reported healthy performance," Makkar mentioned.
— IANS
Reader Comments
Good to see automobile sector doing so well. The GST cuts from last year are finally showing results. But as a middle-class consumer, I have to say - while companies are growing, our household budgets are getting tighter. The El Nino effect on food prices hasn't fully hit us yet. Need to watch that carefully.
Excluding oil & gas, margins are stable at 19% and net profit grew 20%+ - that's actually a much healthier picture than what the headline numbers suggest. India's consumption story is real, whether it's cars, FMCG, or jewellery. The resilience despite West Asia tensions shows how strong our domestic demand is. 🇮🇳
As someone who works in the auto ancillary industry, I can confirm the demand is real. We're struggling to keep up with orders! But let's be honest - this growth is partly inflation-driven. Commodity prices are up, so revenue increases don't always mean more volume. Need to see volume data before celebrating too much.
The government should do more to support the oil refining sector. If crude stays elevated, it'll hurt us all eventually. Also, I hope the RBI is paying attention - with 22% revenue growth and margin pressure, it's a tricky balancing act for monetary policy. But overall, India Inc is showing remarkable resilience.
Seeing this from abroad, India's growth story keeps impressing. The domestic consumption-driven model is paying off. Would love to see more investment in infrastructure to sustain this momentum. Also, those FMCG and QSR numbers show that the Indian consumer is confident, which is a great sign for the economy
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