Companies' margins seen firm in Oct-Dec despite slow growth - CRISIL

MUMBAI Wed Jan 2, 2013 4:18pm IST

A worker paints sifts used for cement filtration at a manufacturing factory in the industrial area of Kolkata June 12, 2012. REUTERS/Rupak De Chowdhuri/Files

A worker paints sifts used for cement filtration at a manufacturing factory in the industrial area of Kolkata June 12, 2012.

Credit: Reuters/Rupak De Chowdhuri/Files

Related Topics

MUMBAI (Reuters) - Indian companies are likely to see their EBITDA (earnings before interest, taxes, depreciation and amortisation) margins staying firm in October-December, despite continuing pressures on demand growth, CRISIL Research said in a note on Wednesday.

"EBITDA margins will be supported by increasing realisations and softening prices of commodities such as coal, rubber and cotton," Mukesh Agarwal, president at CRISIL Research, said.

"In addition, stringent cost control by corporates across sectors would further cushion margins," he said.

Excluding banks and oil and gas companies, EBITDA margins are estimated to improve marginally by 10-30 basis points year-on-year in the three months to December, while revenue growth is expected to be muted at 11-13 percent, CRISIL said.

However, overcapacity is expected to dent margins for hotel and shipping companies, while high input costs will drag profitability in paper and petrochemicals.

Sectors such as sugar, tyre, cement and airlines would see an expansion of over 250 basis points year-on-year in EBITDA margins due to higher realisations, Prasad Koparkar, Senior Director, CRISIL Research, said.

Lower input costs would result in higher margins for power generation, textile and tyre companies, he said.

Volume growth is estimated to be muted in the October-December quarter due to weak consumer sentiment and continued macro-economic pressures, CRISIL Research said.

India's economy grew 5.3 percent from a year earlier in July-September and is on track for its worst year in a decade.

(Reporting by Shamik Paul; Editing by Sunil Nair)

FILED UNDER:
  • Most Popular
  • Most Shared

REUTERS SHOWCASE

Tobacco Control

Tobacco Control

India moves toward ban on loose cigarettes to deter smoking   Full Article 

Modi at SAARC

Modi at SAARC

Modi gives Buddha a miss as SAARC leaders flock to Nepal.  Full Article 

Reuters Insight

Reuters Insight

In Modi’s India, green shoots of reform from Rajasthan.  Full Article 

Investing in ETFs

Investing in ETFs

U.S. investors elevate India over other emerging markets  Full Article 

J&K Elections

J&K Elections

Kashmiris turn out to vote as BJP bids for power  Full Article 

Trade Talks

Trade Talks

India, U.S. hold first trade dialogue in four years  Full Article 

Modi's Wife

Modi's Wife

Modi's estranged wife unhappy over round-the-clock security  Full Article 

Global Economy

Global Economy

OECD sees gradual world recovery, urges ECB to do more  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device  Full Coverage