India Inc’s Revenue to Rise 7% This Fiscal, Profit Margins Likely Flat: Crisil

Quick Summary

• Revenue Growth Forecast: Crisil projects India Inc revenue to grow by 6-7% in the current fiscal year, supported by reductions in Goods and services Tax (GST) rates.
• Profit Margins: Despite revenue growth, profit margins may remain flat due to anti-profiteering rules.
• Consumption Impact: GST rate cuts are expected to positively influence consumption-related sectors, wich account for 15% of corporate revenues. The timing aligns with India’s festive and wedding seasons.
• Sectoral Highlights:

– FMCG/Durables/Automobiles: Prices will decrease due to GST restructuring; direct price passthrough anticipated in some sectors.
– Automobiles: Sales of two-wheelers (engine capacity under 350 cc), comprising 90% of the market, are projected to rise by 100-200 basis points due to improved affordability.
– Construction: Lower prices of construction materials may reduce costs for housing projects and stimulate sectoral growth.
– Consumer Durables: Air conditioners and larger television sets likely to see a reduction in maximum retail prices by approximately 7-8%.
– Aviation Sector: GST rate on premium/buisness class tickets rises from 12% to 18%, but minimal impact expected as these travelers are price-inelastic. Economy class remains at a lower unchanged GST rate (5%), making up most domestic airline revenue (92%).
– Agricultural Inputs & Hotels: GST cut set to improve market conditions; tariffs on hotel rooms up to ₹7,500 reduced from 12% to just over half at a new viable travel forward impact benefits threshold.

Indian Opinion Analysis

The Crisil report underscores the nuanced interplay between taxation policies and economic outcomes amidst global uncertainty. while the forecasted revenue growth reflects optimism tied closely with reduced tax burdens across sectors like consumer goods, construction materials, automobiles, aviation services lowering crucial demand relatietdownstairs measureships