India Inc Reports Slowest Growth in September Quarter

Chennai: At a revenue growth of 5-7 per cent in the September quarter, India Inc seems to have marked its slowest pace in 16 quarters.

Slower growth in the manufacturing sector, muted construction activity and lower demand for industrial commodities led to a tepid growth in revenues. Crisil’s analysis of 435 companies that account for almost half of the listed market capitalisation, clocked a slower revenue growth of 5-7 per cent for the September quarter. In the June quarter, these companies had posted 8.3 per cent growth.

The HSBC India Manufacturing Purchasing Managers' Index too had found that manufacturing sector growth slowed to an eight-month low in September as factory production and sales eased. For the third straight month, rates of expansion in factory production and sales receded and international orders rose at the slowest pace in a year-and-a half.

Among industrial inputs, coal saw a 6-7 per cent revenue decline due to lower offtake. The power segment, which accounts for 70 per cent revenue contribution, grew just 1 per cent. Among construction-linked sectors, steel revenue fell 2-3 per cent due to price drop led by cheap Chinese imports.

Construction activity eased due to slow project awarding and tightening in the financing environment. Project awarding was hit in the June quarter due to the general elections. Even after elections, sluggish government spending has slowed construction activity. The Ministry of Road Transport and Highways (MoRTH) is set to award 8,000 km of road projects in FY25, lower than 12,500 km annually between FY22 and FY23 and 8,581 km in the last fiscal.

“Revenue of industrial commodities, investment and construction-linked sectors—collectively accounting for 38 per cent of our sample set—grew only 1 per cent, weighing down overall performance,” said Pushan Sharma, Director-Research, CRISIL Market Intelligence and Analytics.

Slower construction activity has hit the cement sector’s revenue growth which slipped 2-3 per cent. The monsoon also impacted the petrochemicals sector, which reported flat on-year revenue growth in the second quarter. The agriculture sector, including fertilisers, saw a 20-22 per cent drop in revenue due to fall in raw material prices.

Some of the sectors that reported better growth included consumer discretionary sectors like automobiles and telecom services.