Key Points
India's corporate profits to gross domestic product (GDP) ratio, which had fallen to below 2.5% toward the end of the last decade on deteriorating bank assets and higher input costs, has since recovered to near 4%..
The majority of the shrinkage in US borrowing costs is of much more recent vintage: In the past one month, US ten-year bond yields have declined more than 12%, with the latest Fed commentary shortening the odds on an early end to the rate hardening cycle that was the steepest since the 1970s' oil crisis...
Indian companies have lately boosted margins from the 2020 trough, but volumes have consistently trailed the exponential growth in operating profitability...
That would mean the current corporate profit trend is only reaching the midpoint of the expected range, pointing to continued buoyancy in operating profits, anchored in reasonably stable input costs...
The trend wasn't drastically different in the June quarter either, suggesting that unless weighed down by input costs, which seem headed lower in time-value terms in a slowing global economy, Indian manufacturers and product makers will unlikely raise prices and risk volume loss in the bargain...
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