India’s Q2 Revenue Growth Slows to 5-7% Amid Weakness in Construction, Agri, and Industrial sectors: Crisil

A recent report by CRISIL Market Intelligence and Analytics highlights a significant slowdown in revenue growth for Indian corporations during the July-September quarter, with growth rates plummeting to 5-7%, the slowest pace observed in the past 16 quarters. This downturn has been largely attributed to lackluster performances in key sectors, particularly construction, industrial commodities, and agriculture.

Construction and industrial commodities sectors saw 1% growth

The construction and industrial commodities sectors saw a mere 1% growth, heavily impacting overall revenue expansion. Notably, the agriculture sector, which includes fertilizers and constitutes 2% of the sample’s revenue, experienced a sharp decline of 20-22%. Additionally, the export segment, accounting for approximately 22% of the sample, reported modest growth of 5%, while the “others” vertical, which includes aluminum, grew by only 4%.

Elizabeth Master, Associate Director of Research at CRISIL, commented on the sector performance, stating that among the top 10 sectors—responsible for 75% of total revenue—eight experienced EBITDA margin expansion, particularly in export-linked sectors such as IT services and pharmaceuticals, as well as in investment-linked sectors like power and consumer discretionary areas such as automotive and telecom services. However, the steel and cement sectors faced margin contractions due to rising iron ore prices and subdued pricing, respectively.

Despite the overall revenue slowdown, company profitability remained resilient. The analysis estimates that aggregate EBITDA for firms grew by about 10% in the second quarter of fiscal year 2025, with EBITDA margins projected at 21-21.5%. Looking ahead, CRISIL anticipates further margin improvements of 50-150 basis points in fiscal 2025, driven by easing commodity prices and enhanced volume-based revenue growth.