Subdued realisations, higher energy costs to shrink margins of base metal industry by 200-225 bps in FY2024

The earnings of the primary base metal industry would remain under pressure in H2 FY2024, after a lacklustre first half performance, which saw operating margin declined by ~250 bps, said a recent report by ICRA. Stagnant base metal prices in the last two quarters and a recent increase in energy costs are the key headwinds affecting the margins, it added. Nevertheless, the domestic demand growth rate is likely to remain healthy at ~10 per cent in the next two fiscals and would significantly outpace the expected rate of global demand growth. As a result, despite pressure on profitability, ICRA has maintained a stable outlook on the sector.