Key Points
A moderation in cost of raw materials paired with improved demand-supply balance is likely to push the profit margins of Indian companies, rating agency Fitch said in a report on Friday...
The report titled 'India Corporates: Sector Trends 1H23' stated, "We expect profit margins for Fitch-rated Indian corporates to improve by around 220bps in FY24."..
Multiple factors including geopolitical tensions, rate hikes by central banks across the world and tighter trade norms had created a gap in the demand-supply chain..
"This is notwithstanding our expectation of rising capex on Indias structural demand visibility, supply-side reforms by the government and healthier corporate and bank balance sheets," it said.. While taking into consideration the capex, the report stated that for steel, cement and pharmaceutical sector the capex is likely to remain high due to rising infrastructure spending..
Indian corporates have preferred domestic debt over offshore issuance in the last 12-18 months, reflecting offshore debts unfavourable pricing dynamics following steep monetary tightening overseas and rising emerging-market risk premiums from the geopolitical strife in Europe."..
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