Impact check: Higher crude oil prices threaten India Inc's profit margins

Weak demand, global slowdown add to their woes

Crude oil

Photo: Bloomberg

Krishna Kant Mumbai
The recent surge in crude oil prices could shave off the gains made by India Inc in profit margins in the past few quarters. Worse, it comes at a time when consumer demand in the country is slipping and major global economies are witnessing a slowdown.
A back-of-the-envelope calculation suggests that the margin expansion accounted for three-fourths of the rise in the listed firms’ operating profit between the April-June quarter (Q1) of FY23 and Q1FY24, and only a quarter of profits  gains came from revenue growth.
The weakening of consumer demand is also visible in slowing topline growth. The listed companies’ revenue growth in Q1FY24 was the lowest in the last nine quarters, and a sharp deceleration in India’s nominal

First Published: Sep 25 2023 | 11:24 PM IST

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