India Inc’s PAT margins may fall to 8.1% in FY11: CMIE

India Inc’s PAT margins may fall to 8.1% in FY11: CMIE

Mumbai: India Inc’s Profit After Tax (PAT) margins are likely to shrink to 8.1% in the current fiscal as against 8.9% in the year-ago period, an economic think-tank forecast in its report.

The domestic corporates’ profit growth is also likely to be restricted to 6.8% in FY11, owing to the fall in profits in Q2 of the 2010-11 fiscal, it said.

“The PAT margin will contract to 8.1% in 2010-11 from 8.9% last fiscal," the Centre for Monitoring Indian Economy (CMIE) said in its latest report on the state of domestic economy.

According to CMIE, while profits are expected to rise by 23.3% and 16.6%, respectively, over the remaining two quarters of the fiscal, the fall reported in the June quarter would restrict the profit growth to 6.8%.

“We expect the growth in corporate profit to pick up in the second-half of 2011. The petroleum products and sugar industry will return to profit from the December 2010 quarter," CMIE said.

This would bring an improvement in the profit performance of Corporate India, the report said, adding, “however, the fall reported in June quarter will restrict the growth in corporates profits in FY11 to 6.8%."

Sales are, however, likely to rise by 18.3% in the reporting fiscal, much faster compared to the 5.9% which India Inc registered in FY10, CMIE said.

Both the manufacturing sector and non-financial services would show an acceleration in growth at 20.5% and 15.2%, respectively, during the year, it said.