Commodity price rise, bond yields could weigh on India Inc's earnings

Higher margins more than compensated for flat revenues during the quarter

The recent spike in interest rates and commodity prices not only raises questions on the Nifty50’s sky-high valuation but could also weigh on the profitability of India’s top companies. 

The bump-up in corporate earnings in the last few quarters largely came from higher margins due to lower operating and finance cost rather than higher revenues and sales volume.

The Nifty50 companies’ operating profit (EBITDA) margins were up nearly 240 basis points year-on-year (YoY) while profit before tax (PBT) margins were up nearly 200 basis points in Q3 of FY21 YoY as companies saved on raw materials, energy and interest cost.

Higher margins more