Sluggish exports, weak support from Covid-19 vaccine opportunities, and a slow pick-up in demand in the domestic formulations market as some of the reasons behind the possible degrowth, as per the company.
It also said that the operating profitability is also expected to shrink by as much as 300 basis points this fiscal year, due to a sharp increase in input and other costs.
"Well-managed balance sheets and prudent capital spends will, however, help keep credit quality 'stable'," Crisil added.
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"Exports have been sluggish because of intense competition among generic players amid intensifying pricing pressure in the US market and lower visibility of new product launches due to delay in closure of regulatory actions on manufacturing plants by the US Food and Drug Administration (US FDA)."
On the other hand, domestic demand is witnessing a steady recovery after tepid performance last fiscal, said Isha Chaudhary, Director at Crisil Research.
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"With normalcy returning to healthcare delivery services, domestic formulations revenue, led by acute therapies, is estimated to grow 14-16 per cent this fiscal, compared with 2 per cent last fiscal. Further, with ramped-up capacities and improving pace of vaccination, Covid-19 vaccines also provide additional domestic growth potential this fiscal," Chaudhury said.