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Companies' margins seen firm in Oct-Dec despite slow growth - CRISIL
January 2, 2013 / 10:53 AM / 5 years ago

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

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.

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

“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

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