'Extended war could trim companies' profit margins'

MUMBAI: Extended supply chain disruptions from the West Asia conflict could shave around 200 bps (100 bps= 1%) off India Inc's operating profitability this fiscal year, pulling margins down from a pre-conflict expectation of around 12%, according to a stress test by Crisil Ratings.

The agency assessed 34 sectors accounting for 65% of its rated corporate debt to gauge the macroeconomic and sectoral impact of the crisis. The stress scenario assumes supply chain disruptions persist for nine months, up from a base case of six months, and crude oil prices average $110 per barrel instead of the projected $95.

The agency said overall credit quality will remain resilient despite profitability pressure. It said strong balance sheets, steady domestic demand, and govt-led capital expenditure will cushion corporate stability.

Ready to Make a Smarter Property Decision? Build Your Legacy with TOI Homes.