New Delhi, Feb 24 (KNN) Corporate India is projected to achieve 7-8 per cent year-over-year revenue growth in Q4FY25, driven by strengthening rural demand and increased government expenditure, according to a recent ICRA report.
The operating profit margins are expected to stabilise between 18.2-18.4 per cent, bolstered by improved consumer sentiment and rising demand.
Following the Reserve Bank of India’s 25 basis points reduction in repo rate, companies are anticipated to benefit from lower borrowing costs, with the interest coverage ratio potentially expanding to 4.6-4.7 times from 4.5 times in the previous quarter.
ICRA’s Senior Vice President and Co-Group Head of Corporate Ratings, Kinjal Shah, expressed optimism about rural demand prospects for the first half of calendar year 2025. This positive outlook is attributed to strong kharif crop yields and favourable conditions for the ongoing rabi season.
Urban demand, which has remained subdued, is expected to recover due to income tax relief measures announced in the Union Budget 2025, monetary easing policies, and anticipated moderation in food inflation.
The report highlighted several key factors requiring close monitoring, including global economic and political developments, currency exchange fluctuations, the impact of new U.S. presidential policies, government spending patterns, and domestic urban demand revival.
While private capital expenditure is expected to remain measured due to geopolitical uncertainties and subdued export outlook, specific sectors such as electronics, semiconductors, and electric vehicles are likely to see increased investments, aligned with the government’s production-linked incentive programs.
An analysis of 601 listed companies’ third-quarter performance revealed a 6.8 per cent year-over-year revenue growth, primarily driven by consumption-oriented sectors including consumer durables, FMCG, retail, hospitality, and airlines.
However, commodity-oriented sectors, particularly iron and steel, experienced declines due to weak global demand and competition from Chinese imports.
Sequential revenue growth remained modest at 3.5 per cent, reflecting continued urban demand slowdown despite some festive season recovery.
Corporate India’s operating profit margins showed improvement in Q3, increasing by 31 basis points year-over-year to 18.1 per cent, supported by revenue growth and moderating input costs.
Sectors such as metals and mining, fertilisers, pharmaceuticals, power, hospitality, oil and gas, and chemicals demonstrated margin improvements due to enhanced product mix and operating leverage benefits.
However, sectors like cement and tires experienced margin contractions due to urban demand slowdown and elevated input costs. While input costs have recently moderated, they remain above historical levels, keeping operating profit margins below the peak of 19 per cent observed in FY2022.
(KNN Bureau)
