India Inc is set to post an 18-20 per cent revenue growth for July-September as compared to the year-ago period, domestic rating agency Crisil said on Thursday ahead of the filing of quarterly earnings by companies.

The handsome growth in the topline will be driven by both higher volumes and higher commodity prices, the rating agency said.

However, the rising input prices may have capped operating profit margin expansion for companies when compared to the preceding quarter, the agency said.

Companies had taken a cautious approach immediately after the onset of pandemic and resorted to a host of cost control measures including salary cuts which resulted in businesses being largely protected even as demand dried up.

Crisil said the recovery for the Q2 was seen across sectors, led by higher volumes and commodity prices. Volume gains are attributable to a low base of the second quarter of fiscal 2021, which saw regional lockdowns and slower economic activity.

Of the 40 sectors represented by its sample set of 300 companies (excluding financial services and oil), 24 are expected to have grown by over 20 per cent, it said.

If one excludes commodity-linked sectors such as steel products and aluminium, overall growth is expected to have been a notch lower at 15-17 per cent, it added.

On a sequential basis, however, revenue is likely to have risen 8-10 per cent in the second quarter of FY2022 as demand was impacted in the first quarter due to the second wave of Covid-19.

For the first half of fiscal 2022, overall revenue is expected to have reached Rs 15.8 lakh crore, up 30-32 per cent over the first half of fiscal 2021, it said.
From a sectoral perspective, it said consumer discretionary and construction will be driving the revenue growth, and telecom will also be in the positive territory.

Aluminium players are expected to have increased their revenue by 45-50 per cent, aided by a 40 per cent estimated increase in domestic prices and 5-7 per cent increase in volume, while the same for steel companies will be up to 40 per cent.

IT and ITeS companies will have a double digit revenue growth in the quarter, while the shortfall in chips will restrict auto industry’s revenue growth to 4-6 per cent.

Operating profit margins are expected to have improved 1-1.20 per cent when compared with the year-ago period, but dropped by 0.40-0.80 per cent when compared with the June quarter.