India Inc's Profit After Tax (PAT) margins are likely to shrink to 8.1 per cent in the current fiscal as against 8.9 per cent 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 per cent in FY 11, owing to the fall in profits in Q2 of the 2010-11 fiscal, it said.
"The PAT margin will contract to 8.1 per cent in 2010-11 from 8.9 per cent 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 per cent and 16.6 per cent, respectively, over the remaining two quarters of the fiscal, the fall reported in the June quarter would restrict the profit growth to 6.8 per cent.
"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 FY 11 to 6.8 per cent."
Sales are, however, likely to rise by 18.3 per cent in the reporting fiscal, much faster compared to the 5.9 per cent which India Inc registered in FY 10, CMIE said.
Both the manufacturing sector and non-financial services would show an acceleration in growth at 20.5 per cent and 15.2 per cent, respectively, during the year, it said.