Commodity linked sectors revenue growth slowed to 12.4% in Jan-Mar quarter of FY19.
Weakness in consumer sentiments and softening commodity prices have led India Inc to deliver a six-quarter low revenue growth of 10 per cent in the fourth quarter of FY19, a report said Thursday. The revenue growth in consumer-linked sectors was only 3.8 per cent in the fourth quarter of FY19 on a year-on-year basis, down from 27.9 per cent in the third quarter of FY19. Commodity linked sectors revenue growth slowed to 12.4 per cent in the January-March quarter of FY19 as against 51.4 per cent in the third quarter of FY19.”The weakness in the consumer-linked sectors was visible across most consumer-oriented sectors such as passenger vehicles, two-wheelers, consumer durables and FMCG since second half of FY19. The decline in consumer sentiments was visible in both urban and rural segments,” Icra’s Vice President (corporate sector ratings), ShamsherDewan, said. The agency said the Ebitda margin of its sample declined by 44 basis points on a YoY basis and 23 basis points on a quarter-on-quarter basis to 16.6 per cent.
However, several sectors such as airlines, cement, consumer food and consumer durables reported a sequential improvement in margins because of price hike initiated by companies in select sectors, lower cost of imports and softening in commodity prices, it said. The interest coverage ratio of the agency’s sample, adjusted for sectors with low debt levels (IT, FMCG and pharmaceuticals) witnessed a decline to 3.8x from 4.1x in the fourth quarter. The rating agency expects the demand in the automobile sector to remain subdued owing to weak consumer sentiments following rising ownership cost, subdued rural demand and tight financing environment given the liquidity constraints in the financial markets.