New Delhi: The increased price of coal continues to be a drag on the margin of domestic base metal players with no immediate relief in sight, said rating agency ICRA on Thursday.
In a recent note on the primary base metal industry, ICRA said that the earnings of the industry would continue to remain under pressure in the second half of the current fiscal, following a dull performance in the first half of FY23.
"Elevated coal costs along with metal price corrections remain the key headwinds affecting the margins, with no immediate relief in sight," said ICRA in a statement. On account of input cost pressures, the rating agency said, "it has revised its estimates of operating profitability of domestic players downward to 18 percent in the current fiscal."
ICRA's operating profitability forecast for domestic players is almost three percentage points lower as compared to its earlier forecast made in September last year and 10 percentage points lower compared to FY22.
"In FY24, while some respite is expected from better availability of coal linkages, the profitability is expected to remain range-bound at 19-20 percent. Also, our base case does not factor in any significant adverse impact of another pandemic led demand destruction in CY23," said Jayanta Roy, Senior Vice-President and Group Head, Corporate Sector Ratings, ICRA.
(PSU Watch– India's Business News centre that places the spotlight on PSUs, Bureaucracy, Defence and Public Policy is now on Google News. Click here to follow. Also, join PSU Watch Channel in your Telegram. You may also follow us on Twitter here and stay updated.)