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Credit rating agency ICRA in its latest report has said that India Inc. have witnessed sequential expansion in margins in Q4 FY2023, with a YoY increase of 11.4%, while the sequential revenue growth was relatively moderate at 5.2%. On a YoY basis, almost all sectors reported revenue expansion in Q4 FY2023, with aviation, hotels, ports and gems & jewellery leading the trend. This was supported by the easing of commodity prices which continued to positively impact consumer sentiments. 

According to the report, in terms of sequential performance, sectors such as consumer durables, construction, port and gems & jewellery reported significant growth in revenues due to successive price hikes and strong demand witnessed in some sectors. On the other hand, it said few sectors like fertilizers and retail witnessed sequential decline in revenues during the quarter due to decline in realisations, following reduction in input costs.

The interest coverage ratio of ICRA’s sample, adjusted for sectors with relatively low debt levels (IT, FMCG and pharma), witnessed a YoY moderation in Q4 FY2023 to 4.7 times from 5.7 times, mainly on account of lower earnings in select sectors compared to historic trends and higher interest rates on the back of rate hikes by the Monetary Policy Committee (MPC). Other factors contributing to the same included, India Inc’s increased reliance on external borrowings due to higher capital expenditure undertaken for future expansion and higher inventory stocking to mitigate supply chain uncertainties. However, India Inc. showed some improvement in its interest coverage ratio on a sequential basis in Q4 FY2023, aided by the sequential improvement in earnings during the quarter.