Construction and agriculture drag India Inc's Q2 revenue growth to 5-7%, says Crisil report

Sluggish performance in construction, industrial commodities, and investment-linked sectors has led to the moderation in Indian Inc.'s revenue growth, CRISIL Market Intelligence and Analytics observed.

The revenue growth for the three months of the ended September stood at 5-7 %, as per the market intelligence firm. India Inc. experienced a significant deceleration in revenue growth during the July-September quarter, marking the slowest pace in the past 16 quarters.

The sectors such as construction and industrial commodities saw a growth of only 1%, weighing heavily on the overall revenue expansion. Agriculture, which includes fertilizers and accounts for 2% of the sample's revenue, recorded a steep 20-22% decline. The export segment, representing roughly 22% of the sample, grew at a modest 5% while the "other" vertical, including aluminum, grew by 4%.

Reacting to the outcome of the observations, Elizabeth Master, Associate Director-Research, CRISIL Market Intelligence, and Analytics, commented, "Among the top 10 sectors, which account for 75% of revenue, eight saw EBITDA margin expansion, led by export-linked sectors such as IT services and pharmaceuticals, investment-linked sectors such as power, and consumer discretionary sectors such as automotive and telecom services. The two sectors that faced margin contraction were steel, due to higher iron ore prices, and cement, due to subdued pricing."

In contrast, the consumer discretionary, staples, and services sectors posted a robust 15% growth, contributing to approximately 36% of the sample's revenue. Interestingly, despite the revenue slowdown, the profitability of the companies was resilient, as per the analysis.

It further estimates that aggregate EBITDA for companies grew by about 10% in the second quarter of financial year 2025, with the EBITDA margin estimated at 21-21.5%. Among the top 10 sectors, representing nearly 75% of total revenue, eight experienced EBITDA margin expansion, as per the market intelligence firm.

Going further, it anticipates that the margin is expected to improve further by 50–150 basis points over fiscal 2025, driven by easing commodity prices and increased volume-based revenue growth.