The revenue growth, ICRA said, was helped by sectors such as hotels, airlines, automotive, and FMCG due to an ongoing growth in demand, particularly during the holiday season.

ICRA assessed the aggregate revenue of 579 listed companies. It reported that it increased by 3.7 percent on a year-over-year basis during this third quarter increasing margins. The ICRA stated that this was aided by industries like hotels, airlines, automobiles, and FMCG due to an ongoing increase in demand, particularly during the holiday season. The YoY growth in revenue was slowed to a certain extent due to an overall decline in the realization of levels, due to a decrease in the cost of inputs (mainly primary raw materials) in most industries.

Operating leverage benefits and the ease of some expenses for inputs led to an increase in the margin for operating profits (OPM) for India Inc. by 171 bps to 17.2 percent in Q3 FY2024. Although input costs have decreased in the last few months, they remain high compared to historical levels. Consequently, India Inc's OPM isn't yet at the 18-19 percent seen during FY2022, as reported in the report.

Despite the variances in the levels of debt across different sectors, India Inc reported largely stable ratings on credit in the past few years. The increase in earnings due to the impact of a recovery in the demand for all sectors stopped any significant growth in debt/OPBITDA and gearing levels in the H1 of FY2024. As per ICRA, India Inc is predicted to post solid credit metrics as it moves forward even though there is a possibility of additional debt to help support growth.

Furthermore, ICRA expects the revenue growth to slow slightly in the fourth quarter of FY2024 (based on QoQ) and on a high level, with a rumour of a slowdown in infrastructural development because the model code of conduct takes effect before this year's General Elections and uncertainties in the macro-economic environment globally. In addition, concerns over the current geopolitical tensions could affect demand, particularly for export-oriented sectors. In this regard, India Inc.'s ability to overcome these obstacles is crucial, the report said.