While better coal linkage availability would provide some respite, the margins would remain significantly lower than the levels seen in FY2022, the rating agency said.

ICRA expects the primary base metal industry’s earnings to weaken significantly in FY2023 and remain so in the near term.

ICRA expects the primary base metal industry’s earnings to weaken significantly in FY2023 and remain so in the near term, owing to stubbornly high energy costs and range-bound metal prices. 

While better coal linkage availability would provide some respite, the margins would remain significantly lower than the levels seen in FY2022, the rating agency said.

Jayanta Roy, Senior Vice-President and Group Head, Corporate Sector Ratings, ICRA, said, “The operating margins of domestic base metal entities are estimated to weaken significantly by around 10
percentage points(pp) in FY2023 owing to the double whammy of metal price corrections and elevatedcoal costs. While the availability from coal linkages has improved in recent months, the same would
be tested during the upcoming summer season when coal demand from the power sector increases."