According to Crisil Research, India Inc’s revenue growth for the first quarter of the current financial year will hit a 2-year high of 8%. The first sign of top line growth shifting to a higher trajectory was seen in the March quarter, when it surged to 6.5% from a drab 1-3% seen in each of the five quarters preceding, Crisil added.
Crisil says, from an emerging market perspective, this means domestic companies are growing way faster than peers in China, South Korea, Taiwan and South Africa. The contrast couldn’t have been starker: while the financial performance of India Inc is improving, aggregate revenues and EBITDA of companies that are part of the MSCI Emerging Market Index have been swinging the other way, having declined in each of the past 6 quarters,” it adds. The research was done based on 600 companies (excluding financials and oil & gas) that account for 70% of the market capitalization of the National Stock Exchange.Reflecting the pick-up in project execution, construction companies will too witness a moderate 7-8% revenue growth, better than the 5% seen last fiscal. For capital goods makers, though, lack of broad-based capex recovery continues to hurt with revenues likely to decline by 5%, Crisil concludes.
Our View: Higher revenue growth is a good sign and if it continues in the second quarter, then we will be seeing a good uptrend in the stock markets.