India Inc’s revenue growth is expected to touch double digits in fiscal 2024 despite a global slowdown and interest rate hikes, an analysis of 748 listed companies from fiscal 2011 onwards (excluding those from the oil and gas, banking, financial services, and insurance sectors) shows.
his will be driven by a 10-12% growth in revenue for the non-commodity sectors, even as commodity prices remain benign.
Importantly, this will be on the back of a 16-18% on-year rise in revenues in fiscal 2023 after the commodity supercycle boost in fiscal 2022 The revenue increase in fiscal 2023 has been led by an estimated 18-20% on-year increase in non-commodity segments with commodities recording anemic growth of 5-7%, coming off a high base of the previous fiscal.
To analyze the impact of commodity cycles on revenues, the 748 companies have been split into commodity and non-commodity sectors. The share of commodities in overall revenue reached a decadal high of 21% in fiscal 2022 on account of the commodity supercycle compared with ~17% on average between fiscal 2018 to 2021. The share seems to be reverting to the pre-Covid average in fiscal 2024 with the cooling of the commodity cycle.
Margin to recover 120-170 bps in fiscal 2024 from near-decadal low
Operating — or earnings before interest, tax, depreciation, and amortization (Ebitda) — margin of the sample set of 748 listed companies is expected to improve 120-170 basis points in fiscal 2024 aided by three factors — benign commodity prices, the full effect of price hikes taken in fiscal 2023 playing out, and the volume-driven expansion projected in fiscal 2024
Operating margin hit an all-time high of 20.7% in fiscal 2021, boosted by a drop in the cost of goods sold on account of lower commodity costs. Indeed, raw material costs declined to decadal lows.
Power and fuel costs, selling expenses, and other expenses also declined on account of a fall in crude prices, slashed marketing spending, and cost optimization efforts employed by companies during the pandemic. However, the commodity supercycle that ensued thereafter lifted the absolute
