Rising commodity prices weighed on Corporate India’s margins in Q3FY22, HDFC Securities said in a research report.
According to the report, the current earnings season is performing largely on expected lines with respect to revenue growth.
However, margins across the board fell primarily due to higher raw material prices.
Lately Covid has triggered supply issues as well as other global developments have driven up commodity prices.
Furthermore, he pointed out that the inability to fully pass on higher costs due to “not so robust demand”, especially on the rural side, added to the trend.
“Some results from large companies have yet to be released and whether the trend continues or reverses will be monitored.”
“The fourth quarter will also see some impact from the latest Omicron-related disruptions.”
Among sectors, PSU bank stocks performed well.
However, stocks in the refining, consumer durables and cement sectors performed below expectations.
“Among the sectors, textiles, sugar or ethanol, engineering, PSU banks, footwear, certain chemical stocks, steel, media and IT performed well.”
“The automotive, paints, life insurance, pharmaceuticals, refining, consumer durables and cement sectors disappointed.”
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