Chart of the week: India Inc. to close this fiscal with margins at pre-pandemic levels

7 Mar 2024 , 04:49 PM

Easing supply pressures are lending stability to commodity prices, which in turn could aid profitability of Indian companies. Commercial-linked, consumer staples and discretionary products (which make up 52% of corporate India’s EBITDA) are likely to witness higher margin expansion, believe analysts at CRISIL. FY23 underscored the susceptibility of Indian corporates to volatility in global commodity prices, which trended up before stabilizing. Factors such as interventions by global policymakers, improvement in supply chain bottlenecks, easing geopolitical standoffs and recalibration of demand forecasts together led to a moderation in commodity prices during the past twelve months. CRISIL expects broad-based margin expansion in FY24 amid easing input cost inflation and steady volume growth. They believe this trend could continue in FY25 as well. However, they believe, the Red Sea crisis remains a key monitorable, particularly for Asia-Europe shipping lanes, as it has resulted in increased transport times and higher freight costs.