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India Inc’s profits to suffer hard knock from inventory losses – Part II

April 30, 2020 / 09:04 AM IST
India Inc’s profits to suffer hard knock from inventory losses – Part II

PRO Only Highlights
Quarterly performance largely backed by improved realisations
Medium-term triggers China plus and protectionist measures for tyre industry
Valuations not inexpensive; but improved medium-term outlook

The coronavirus pandemic has stalled business activity due to the ongoing national lockdown. Companies are caught in a trap of bleak sales and bloated inventories. Given the current situation, businesses are staring at losses on their current inventory due to a multitude of factors, including high storage costs, collapse in pricing power, commodity price drops and product obsolescence or expiry. Once the economy opens up again, companies will be forced to liquidate their stockpiles to reduce losses. In the first part,...

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