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Domestic rating agency ICRA in its latest report has said that India Inc is bracing for revenue uncertainties in the April-June period (Q1FY25) due to a slowdown in government spending during the Parliamentary elections and the onset of the annual monsoon season. It noted that there was a 6.5 per cent growth in revenues in the March quarter (Q4FY24) as compared to the preceding December quarter (Q3FY24).  

However, the rating agency said that the steady raw material costs will help ensure that the operating profit margin (OPM) will remain steady in the range of 15-18 per cent, and credit metrics will also be largely stable. The agency said its analysis of 558 listed companies' performance in the March quarter indicates an improvement in the profit margins by 0.92 per cent compared to the year-ago period at 17.2 per cent.

The report further said the improvement in profit margins was mainly aided by the softening in commodity prices and benefits of operating leverage, and added that the margins remained flat on a sequential basis. The interest coverage ratio of ICRA’s sample set companies, adjusted for sectors with relatively low debt levels like IT, FMCG and pharma, improved marginally in the March quarter. It said there was a marginal increase in the debt levels and added that sectors like gems and jewellery, construction, sugar, and chemicals borrowed more due to an increase in working capital requirements.