The spike in input costs is starting to pinch profit margins, prompting companies in some sectors to take guarded price hikes. However, the net profit margins and operating profit margins of these companies narrowed to 6.20% and 16.26% in Q4, compared to 9.30% and 20.18% in Q3, respectively. “While rising commodity prices benefit only 11 companies or 22% of Nifty constituents, the profit share of these companies in Nifty FY22 earnings would be approximately 36%. Similarly, Britannia Industries Ltd faced an overall commodity basket inflation of 3%, with steep price rises in palm oil and milk in Q4. Marico did reasonably well, given significant inflation in copra and edible oil prices.

Source: Mint May 25, 2021 20:00 UTC