India Inc Growth Near Decadal Average As Cost Pressures Mount
Corporate India’s revenue growth is expected to remain close to its decadal average in fiscal 2027, supported by domestic consumption and policy tailwinds even as global uncertainties and volatile energy costs weigh on profitability, according to a report by Crisil Intelligence.The report estimates that corporate revenue growth will stay range-bound at 8 to 9 per cent in fiscal 2027, broadly in line with the average annual expansion seen over the past decade. The projection is based on an analysis of 905 listed companies, excluding oil and gas as well as banking, financial services and insurance firms, which together account for roughly 65 per cent of the total market capitalisation of listed companies in India.
Crisil said revenue growth in fiscal 2026 had received a boost from stronger consumer spending on both goods and services, along with healthy expansion in capital goods sectors linked to the energy transition and automation. That momentum is expected to continue into fiscal 2027, though at a steadier pace.
“Discretionary consumption spending will be a key driver of growth in fiscal 2027,” the report said, adding that the outlook is supported by factors such as rationalisation of Goods and Services Tax (GST) rates, direct benefit transfers and the government’s continued push towards manufacturing.
Volume-led Growth Across Sectors
The analysis indicates that growth will be largely volume-led across sectors, with domestic demand remaining robust despite global macroeconomic volatility. Crisil estimates that nearly two-thirds of sectors will see revenue expansion primarily driven by higher volumes rather than price increases.
Passenger vehicles and two-wheelers are among the segments that saw strong revenue gains in fiscal 2026, helped by GST rate reductions that boosted demand. The report said the impact of these rate cuts is expected to continue into the first half of fiscal 2027, though the pace of growth may moderate.
Commercial vehicles are also expected to benefit from healthy freight demand, higher utilisation rates and steady replacement demand following GST and interest-rate reductions. In metals and mining, revenue growth is likely to remain volume-driven, though a marginal decline in steel prices could constrain overall expansion. However, rising non-ferrous metal prices may partly offset the pressure and support revenue growth in the sector.
The IT sector, meanwhile, is expected to see marginal revenue expansion in fiscal 2027 as global macroeconomic conditions gradually improve and previously deferred projects resume. Mid-tier IT companies with lower exposure to large, high-ticket contracts could display greater resilience in the near term, the report noted.
Healthcare is projected to record stronger growth, particularly in hospitals where higher revenue per occupied bed and capacity expansion are expected to improve operational performance. In pharmaceuticals, however, competition in generics and declining demand in the United States for older bulk drugs could weigh on growth.
Export diversification to regions such as Latin America and Africa and a shift towards biosimilars and specialty products may support revenue expansion in the pharmaceutical segment. Other sectors are also expected to see mixed performance. Chemicals could benefit from domestic demand and capacity expansion aimed at import substitution, though volatility in crude oil prices and rising global petrochemical capacity may limit gains.
Construction materials, including cement and paints, are likely to see revenue growth driven by improved demand. However, intense competition could restrict price increases, keeping pricing power limited despite higher volumes. The report also flagged risks to corporate profitability.
While revenues are expected to expand steadily, margins may remain under pressure due to volatility in energy prices and raw material costs, which could impact corporate balance sheets during the year. Despite these pressures, Crisil said the overall financial health of corporate India remains strong. Corporate balance sheets have improved significantly over the past decade, giving companies greater financial flexibility and enabling them to support growth through capital expenditure and expansion plans even amid global economic turbulence.
CareEdge Ratings On India Inc Growth
According to a report by CareEdge Ratings, India Inc posted strong revenue growth in the third quarter of FY26, but rising employee, services and raw material costs moderated profit expansion, highlighting growing pressure on corporate margins despite improving demand conditions.
Net sales of 1,396 listed non-financial companies analysed in the report rose 11.4 per cent year-on-year in Q3 FY26 to Rs 29.4 lakh crore, accelerating from 10 per cent growth recorded in the previous quarter. The expansion marked the second consecutive quarter of double-digit sales growth. It was driven by stronger demand during the festive season and supportive policy measures, including GST rate rationalisation, past income tax reductions and earlier interest rate cuts by the Reserve Bank of India.
However, the pace of profit growth slowed as companies faced higher expenditure across key cost components. Operating profit increased 12 per cent year-on-year in Q3 FY26 to Rs 5.6 lakh crore, but this was slower than the 15.7 per cent growth recorded in Q2 FY26. Total corporate expenditure rose 11.2 per cent in the quarter, up sharply from 8.7 per cent in the previous quarter, reflecting rising input and operating costs across sectors.
Employee costs increased 12.1 per cent in Q3 FY26 compared with 8.6 per cent in Q2, while expenses related to services and raw materials rose 11.4 per cent from 8.1 per cent in the previous quarter. The report attributed part of the increase in input costs to strengthening global industrial metal prices, with the Bloomberg industrial metals sub-index rising about 4.5 per cent year-on-year during the period.
Rising expenditures also led to a modest decline in operating margins. The aggregate operating profit margin of companies analysed slipped to 19 per cent in Q3 FY26 from 19.5 per cent in the previous quarter. Profit after tax also faced additional pressure due to higher provisioning related to the implementation of new labour codes, which were classified under exceptional items in the company's financials.
Despite the squeeze on margins, companies showed improved debt servicing capacity. The interest coverage ratio for the sample of firms rose to 8.4 in Q3 FY26 from 8.1 in the previous two quarters, and remained above the average of 7.9 recorded over the last eight quarters. The revenue growth in the quarter was broad-based across several sectors, particularly those linked to consumption and investment activity.
Sectors such as automobiles, information technology, non-ferrous metals, pharmaceuticals and drugs, capital goods and fast-moving consumer goods (FMCG) contributed to the improvement in overall sales performance. Demand in consumption-oriented sectors, including automobiles and FMCG, benefited from stronger festive spending and policy measures aimed at boosting household consumption.
Among the sectors analysed, four industries recorded strong growth in both sales and operating profits. Non-ferrous metals, automobiles and ancillaries, retailing and capital goods posted net sales growth above 16 per cent along with operating profit growth above 20 per cent.
Automobiles and ancillaries saw sales rise 19.6 per cent year-on-year in Q3 FY26, up from 13.6 per cent in the previous quarter, reflecting improving demand conditions. The retailing sector recorded the fastest revenue expansion among sectors analysed, with net sales growth of 40.6 per cent compared with 39.3 per cent in Q2 FY26.
Capital goods companies also reported strong performance, with net sales increasing 22.8 per cent and operating profits rising 29 per cent year-on-year. In the non-ferrous metals sector, sales grew 19.5 per cent, accelerating from 10 per cent in the previous quarter, supported by higher realisations due to stronger metal prices.
Sectors That Showed Moderate Performance
Information technology companies posted sales growth of 10 per cent year-on-year, while pharmaceutical and drugs companies recorded a 13 per cent increase. FMCG companies saw revenue growth of 9.6 per cent in Q3 FY26. In contrast, some sectors experienced weaker profitability despite revenue growth. The cement sector reported a 12.3 per cent contraction in operating profits, while media and entertainment companies recorded a 6.8 per cent decline in operating profit during the quarter.
The crude oil sector also continued to show subdued revenue performance, with net sales rising only 2.2 per cent year-on-year in Q3 FY26 compared with 0.4 per cent growth in the previous quarter. The report said muted crude oil prices during the period weighed on revenue growth in the sector. More broadly, the report said domestic economic fundamentals remained supportive for corporate activity, particularly due to improving consumption trends and continued government emphasis on capital expenditure.
Investment activity has also shown encouraging signs, with early indications of a revival in private sector investment alongside ongoing government infrastructure spending. However, the report flagged global uncertainties as a key risk for corporate performance going forward.
Heightened geopolitical tensions, particularly the ongoing conflict in West Asia, have raised concerns over potential disruptions to global energy trade and broader economic stability. Such external developments could affect commodity prices, supply chains and trade flows, which may in turn influence corporate costs and profitability. While domestic demand conditions appear steady, the duration and potential economic impact of geopolitical conflicts remain critical factors for businesses to monitor in the coming quarters.
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