Small businesses suffered under the weight of localized and uneven bottlenecks and shorter opening hours during the first fiscal quarter, affecting operations as well as consumer demand. The quarterly earnings season started on July 8 with Tata Consultancy Services Ltd.

Analysts said small businesses had lost market share to their larger competitors, although FY21 was a year of recovery in corporate profits for India Inc., marked by expanding margins and a strong deleveraging of the balance sheets.

“The continuity of covid restrictions means that differences will continue to play out in the June quarter between organized and unorganized players,” said Deepak Jasani, head of retail research, HDFC Securities.

He said once the lockdowns were fully relaxed some of the unorganized players would adjust and resume their activities, but several more would have been forced to close the shutters.

Among sectors, retail, jewelry, real estate, clothing, construction products, footwear, electrical equipment, plastic / rubber products, food products, security services, dairy products, hospitals and diagnostics, beverages, tobacco, leather, wood and wood products, paper and Paper products, chemicals, metal fabrication and education have a strong presence of unorganized businesses and the pandemic has accelerated the pace of market share transfer from them to organized businesses, Jasani said.

Edelweiss Securities analysts said the divergence in growth rates between organized and unorganized companies can be attributed to factors such as banks tightening lending standards for small and medium-sized businesses, lack of availability. raw materials and labor shortages. Large players, by design, are better positioned to weather a supply shock than small firms, the brokerage said.

Meanwhile, the June quarter is expected to see pressure on expanding margins across all sectors as raw material costs have risen sharply. The prices of basic commodities like crude oil and metals jumped during the quarter. Brent prices rose 18%, while aluminum, copper, zinc and lead rose 5-16% during the period.

According to JM Financial, organized businesses are best placed to pass on price increases to offset higher raw material costs. “Even in a period of high input price inflation in the past, the trajectory of income growth has not been materially affected, within a quarter or two and organized actors are actually gaining market share in a period of high inflation in input costs, ”he said. .

In the white goods and durable goods segment, analysts at ICICI Securities expect the migration from the unorganized to the organized sector to regularly generate value for the latter. “The large household appliance market in India is dominated by multinational corporations (MNCs). Due to constant technological changes and greater investment in R&D (research and development), we believe they will continue to dominate said segment of the market, ”the brokerage said in a note.

The white goods and durable goods market including televisions, washing machines, air conditioners, refrigerators and dishwashers is dominated by large multinationals.