@csteja
If you see below chart, the gross margin for whole industry has moved between 30% to 46% and also you can see the direction of movement for all companies are more or less same which highlights how much of margins can fluctuate due to raw material prices movement. Usually, it happens in those industry where there is high dependency of profitability on raw material price movement and sector companies do not hold much pricing power. This is typical with tyre companies. FY17 margins were life time highest as rubber prices were at 8 year low. However, nothing goes down forever and nothing goes up forever in commodities. So, one must ensure that in valuation calculation, the PAT margins one is considering is not a cyclic life time high or low margin but an averaged assumption of up and down cycle. In this thread somewhere i have also pasted long term rubber price trend.
So, when i say normalized margins, one must factor out sustainable long term gross margins and then come down to PAT margins and there could be other factors also contributing to better PAT margins like in TVS getting rid of debt has helped in improving bottomline margins apart from falling rubber prices.