Indian corporates are estimated to have recorded their fastest revenue growth in eight quarters during the April-June quarter, aided by higher prices and resilient domestic demand despite supply chain disruptions and elevated input costs triggered by geopolitical tensions in West Asia. Within the automotive space, vehicle manufacturers emerged as among the strongest performers, while tyre makers and airlines faced margin pressure from rising raw material and fuel costs, according to a Crisil Intelligence report.
The automobile sector is estimated to have delivered one of the strongest revenue performances in the June quarter, supported by robust domestic demand, export growth and selective price increases, even as rising input costs weighed on profitability, according to a Crisil Intelligence report.
The report estimates aggregate corporate revenue across more than 400 listed companies grew 11-11.5% year-on-year during the first quarter ended June 30, marking the fastest pace in eight quarters. While higher costs linked to the West Asia conflict lifted fuel, freight and feedstock prices, companies across several sectors were able to pass on part of the increase to customers.
Among the sectors analysed, automobiles are estimated to have recorded revenue growth of 22-24% year-on-year. Crisil attributed the performance to GST-led demand momentum, healthy passenger vehicle and two-wheeler sales, sustained commercial vehicle demand, export growth and selective price hikes.
Tyre manufacturers, however, faced a more challenging quarter despite stronger realisations. The report said higher prices of natural rubber, carbon black and synthetic rubber resulted in an estimated 200-300 basis point decline in margins as replacement costs increased faster than companies could fully pass them on.
The report also highlighted that airlines were among the sectors most affected by rising input costs. Higher aviation turbine fuel (ATF) prices, coupled with softer passenger traffic, are estimated to have led to an EBITDA margin contraction of around 1,000 basis points during the quarter.
On profitability, Crisil estimates aggregate EBITDA margins across Indian corporates contracted by 75-100 basis points year-on-year, as only part of the increase in fuel, freight, packaging and feedstock costs could be passed on to customers. Sectors with significant exposure to crude oil-derived inputs and logistics, including tyres and airlines, were among those facing the greatest pressure.
Automobiles remained one of the strongest contributors to growth. The sector revenue is estimated to have increased 22-24% on-year, supported by GST-led demand momentum, healthy passenger vehicle and two-wheeler sales, commercial vehicle demand, export growth and selective price increases.
Looking ahead, Crisil said the performance of automotive and other manufacturing sectors will depend on the ability to recover higher input costs without affecting demand, alongside the trajectory of fuel, freight and feedstock prices as geopolitical uncertainties continue to influence global energy markets.