Corporate profitability likely fell 200-300 bps in Q1: CRISIL

New Delhi, July 11 (Agency) Corporate profitability likely remained steady in the first quarter sequentially, but fell 200-300 basis points (bps) on-year, CRISIL’s analysis of over 300 companies said on Monday. That would mark the third consecutive quarter of on-year decline. The earnings before interest, taxes, depreciation and amortisation (EDITDA) margins of almost half of the 47 sectors tracked by CRISIL Research are estimated to have contracted on-year during the quarter.

Absolute EDITDA profit, too, shrank for the first time in five quarters as companies were unable to fully pass on the increase in input costs, especially of key metals and energy, the rating agency said. Hetal Gandhi, Director, CRISIL Research, said, “The current fiscal could see Ebitda margin contract further, to reach 19-21 per cent largely due to elevated energy and metal prices. The Ukraine-Russia conflict has sent crude and natural gas prices soaring, and poses uncertainty for trade in metals such as steel, which will lead to elevated prices of commodities and hence continued pressure on profitability.”