A sharp drop in demand across consumption segments pulled down corporate revenue, excluding that of banking, financial services, insurance and oil companies, by 3 per cent in the second quarter of FY20, according to a Crisil Research estimate.

It’s first time in 14 quarters that revenues have declined. In the previous four quarters, between Q2FY19 and Q1FY20, aggregate revenue had grown 11-12 per cent on average.

The estimate is based on an analysis of 430 companies, which account for 65 per cent of the market capitalisation, excluding financial services and oil firms, of the National Stock Exchange.

Says Prasad Koparkar, Senior Director, Crisil Research, “Automobiles, one of the key sectors driven by consumption spending, continues to reel under demand slowdown. Aggregate revenue of listed automobile players is estimated to have dropped 25 per cent in the second quarter.

“In a rub-off, revenue of automotive component makers is estimated to have fallen 14-16 per cent amid production cuts. As for FMCG, weakened rural consumption and a high base are expected to have caused moderation in growth to 6-7 per cent compared with 8.7 per cent in the previous four quarters.

Brokerages also outlined weak corporate earnings for Q2.

Reliance Securities also said the September quarter was marked by weak operating trends discernible in slowdown in revenue growth across sectors.

“While the quarterly earnings are not comparable with that of Q2FY19 and Q1FY20 owing to lower corporate tax rate, reported earnings will grow by 11 per cent for our coverage universe. Aggregate operating profit growth for the quarter will remain muted,” it said.

Motilal Oswal expects its universe’s PBT to grow 2 per cent year on year, but PAT to decline 6 per cent YoY, dragged by automobiles and metals. The difference between profit before tax (PBT) and profit after tax (PAT) was exaggerated because of the deferred tax adjustments in financials, it said.