The Ebitda margins of micro, small, and medium-sized enterprises (MSMEs) will remain between 10-15% below the pre-pandemic level even in FY24 due to the high prices of commodities like crude oil and steel combined with the inability to pass these costs on, according to a report released on Tuesday by Crisil.
This stands in stark contrast to Corporate India, which in fiscal 2021 had a decadal-high Ebitda margin. According to a survey by Crisil Market Intelligence and Analytics, 46% of MSMEs in the previous fiscal year were behind pre-pandemic levels.
“The commodity cycle is turning; this fiscal year, it is predicted that the prices of crude oil and steel would decline by 13–15% and 3–5%, respectively. This will enable the MSME industry’s Ebitda margin to surpass the pre-pandemic level and reach 5.7–5.9% this fiscal year, along with increased sales. Nevertheless, 10% to 15% Due to the minimal pass-through of increased commodity prices, MSMEs by value will still be below pre-pandemic levels, according to Pushan Sharma, Director of Research at Crisil Market Intelligence & Analytics.
But according to the agency, the entire MSME universe has already surpassed the pre-pandemic level in terms of revenue.
Due to the downturn in major economies and the reconfiguration of global supply lines, crude oil prices are expected to decline, but they will still be high at 1.3 times pre-pandemic levels. According to this, steel prices will continue to be high at 1.5 times pre-pandemic levels despite pressure from poor global demand and a drop in coking coal prices.
