Synopsis
Indian firms are projected to achieve a significant 7-8% growth in revenue during Q4 FY25, primarily due to a revival in rural demand and increased government spending, as reported by ICRA. The operating profit margins are expected to stabilize, while the interest coverage ratio is set to slightly improve.Key Takeaways
- Indian companies to see 7-8% growth in Q4 FY25.
- Rural demand and government spending are key drivers.
- Operating profit margins projected at 18.2-18.4%.
- Interest coverage ratio expected to rise to 4.6-4.7 times.
- Urban demand set to improve post sluggishness.
New Delhi, Feb 24 (NationPress) Driven by a resurgence in rural demand and a boost in government spending, Indian corporations are anticipated to achieve a robust 7-8 percent revenue growth in the final quarter of the current fiscal year (Q4 FY25), according to a report released on Monday.
Additionally, the recovery in operating profit margins (OPM) seen in recent months is expected to be sustained at 18.2-18.4 percent, bolstered by rising demand attributed to enhanced consumer sentiments, as stated in an ICRA report.
Nevertheless, challenges such as ongoing global uncertainties, particularly regarding trade tariffs, could impact growth trajectories, the report cautioned.
Alongside lower interest expenses resulting from the recent repo rate cut, a slight increase in the interest coverage ratio for Indian corporations is projected, reaching 4.6-4.7 times in Q4 FY2025, compared to 4.5 times in Q3 FY2025.
“Rural demand is predicted to remain strong in H1 CY2025, supported by healthy output from most kharif crops and a positive outlook for the ongoing rabi season,” remarked Kinjal Shah, Senior Vice President and Co-Group Head of Corporate Ratings at ICRA Limited.
Furthermore, a normal and well-distributed monsoon in 2025 will be essential for favorable agricultural results.
After a period of stagnation, urban demand is also expected to pick up, aided by significant income tax relief in the Union Budget 2025, monetary easing by the Reserve Bank of India, and anticipated moderation in food inflation, which should enhance discretionary spending, he noted.
The evolving global economic and political landscape, fluctuations in foreign exchange rates, the influence of new US President Donald Trump's policies, increased government spending, and a revival of domestic urban demand will be critical factors to monitor in the near future.
Promising sectors such as electronics, semiconductors, and specialized areas within the automotive sector, including electric vehicles, are expected to witness a surge in investments, in alignment with various production-linked incentive programs introduced by the government, the report highlighted.
