Second pandemic wave derails recovery momentum of India Inc

By Sarkaritel June 5, 2021 20:50

Second pandemic wave derails recovery momentum of India Inc

New Delhi [India], June 5 — Ratings agency ICRA believes that while growth in Q1 FY22 will be optically aided by the extremely low base of previous year, the second pandemic wave has derailed growth momentum.

The growth has been particularly hit in consumer-oriented sectors, said ICRA in a performance review and outlook.

On the other hand, essential services and construction activity are relatively less impacted vis-a-vis last year with learnings from the first wave and less stringent restrictions aiding their functioning.

The pace and sustainability of recovery in subsequent quarters will depend on timelines associated with pandemic intensity and vaccination rollout, said ICRA.

Input cost pressures are likely to catch up with Corporate India especially as the second wave limits further sequential recovery and operating leverage benefits over the near term.

Accordingly, said ICRA, margins are expected to gradually moderate to sustainable levels.

In Q4 FY21, recovering from the troughs of pandemic and supported by favourable base of the previous year (which had lost 10 days to the nationwide lockdown), Corporate India Inc reported healthy year-on-year growth.

With healthy demand recovery and firming up of commodity prices, Corporate India’s growth was significantly boosted during the quarter with aggregate revenues of 389 listed companies evaluated by ICRA (excluding financial sector entities) grew by 21.9 per cent and 11.3 per cent year-on-year and sequentially respectively.

Consumer-oriented and commodity-led sectors reported encouraging trends supported by demand revival and firm prices as macro-economic environment reported healthy sequential recovery post the relaxation in lockdowns.

Besides, industrial and infrastructure-oriented sectors also reported growth trends, supported by the government focus on infrastructure spend and low base of previous year.

Sectors like IT, logistics, pharmaceuticals, power and telecom also contributed to the year-on-year revenue growth, said ICRA.

Cost-control measures adopted during the first half of year to offset pandemic-related disruptions helped India Inc weather input-cost related headwinds and report strong margins during Q4 FY21.

By Sarkaritel June 5, 2021 20:50

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