“After the two weeks of confusion, this is a positive move for the sugar companies. The government allowing the industry to divert some amount of sugar juice towards ethanol, is clearly a positive move in terms of the profitability that would have happened otherwise if the ban would have remained. So, net-net, this is a positive move from a margin standpoint.”
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.