Indian Companies’ Margin to slip by 1 % as per in the Second Quarter of 2011-12 Fiscal

According to the report by Crisil Research, companies are likely to post a revenue growth of around 15 per cent, as compared to 19 per cent in April-June quarter and 22 per cent in July-September quarter of 2010. The report is based on an analysis of the aggregate financial performance of select companies across 21 industries (excluding banks and oil csompanies).

Real estate companies are likely to see their revenues fall by about 5 per cent in the July-September period due to increase in cost of inputs like cement. During the same period, airline companies are likely to see EBITDA margins decline sharply to 10 per cent from 22 per cent in 2010 due to higher aviation turbine fuel costs.

India Inc is expected to report a moderation in revenue growth and lower margins in the quarter ending September 2011 (Q2 FY' 12), due to decline in consumer confidence, on account of stubbornly high inflation and rising interest rates, and uncertainty over future income growth.

Only pharmaceuticals, steel products, cement and paper companies are projected to gain in terms of margins, but that too with a maximum of up to one per cent during the quarter.

According to the report although companies have hiked prices, slower volume growth, along with high input costs and rising wages, would put pressure on margins. With increase in interest rates, net margins are expected to fall even more sharply.

For the construction sector, revenue growth is likely slow down to around 11 per cent, while EBITDA margins are projected to decline by 100 basis points to 9.6 per cent due to steep increase in prices of key inputs, mainly cement and steel.

IT services providers are expected to report buoyant revenue growth of around 17 per cent on the back of strong pipeline. However, EBITDA margins are likely to decline by around 200 bps due to rising salary costs.
The telecom sector is likely to see rise in revenues at a modest rate of 4-5 per cent quarter-on-quarter, as operators have hiked tariffs in key circles.