CRISIL: Corporate India’s Margins to Fall in Final Quarter

Corporate India is expected to report a 200 to 250 basis point (bps) decline in aggregate earnings before interest, taxes, depreciation, and amortization (EBITDA) margins in the fourth quarter of fiscal 2012, which ended on March 31, CRISIL Research warned.

“Corporate India continues to feel the pinch of demand moderation, higher input costs and lack of pricing power,” said Mukesh Agarwal, the senior director at CRISIL Research. “Net margins are likely to decline even more sharply from the 12.7 percent reported in fourth quarter of fiscal 2011 due to higher interest costs.”

CRISIL ResearchOn a quarter by quarter comparison, however, EBITDA margins will improve marginally due to the usual seasonal effect, CRISIL noted.

The research firm forecast that corporate revenue growth will be around 15 percent during the January to March period, down sharply from a 25.5 percent one year earlier. The lower rates of growth follow a slowdown in consumption and investment as well as an uncertain global environment.

The pressure on revenue growth and margins will be broad-based and felt across industries, with organized retailers likely reporting a 100 to 300 bps decline in EBITDA margins, CRISIL said. It analyzed the aggregate financial performance of 227 companies across 26 industries, excluding banks and oil companies.

Leave a Reply

Your email address will not be published. Required fields are marked *