Indian companies experienced their strongest revenue surge in 15 quarters during April-June, but this growth was tempered by shrinking profit margins amid rising costs, with financials and commodity sectors leading the way.
India Inc posted its strongest revenue growth in 15 quarters in the April-June period, but the surge came with a squeeze on margins as higher commodity and energy costs fed through to company books. In the Business Standard sample of 3,458 firms, adjusted net profit rose 16% year on year to about ₹4.58 trillion in Q1FY27, while net sales climbed 18.4% to ₹47.27 trillion, the fastest top-line expansion in 15 quarters. Operating margin for non-BFSI companies fell to 16.9%, the weakest in 13 quarters, while net profit margin slipped to 7.4%.
The pressure on profitability came mainly from a sharp rise in input costs. For non-BFSI companies, spending on raw materials and on power and fuel rose 29.5% from a year earlier, outpacing the 21.2% increase in sales. That helped drag adjusted net profit growth for these firms to 12.7%, the slowest pace in four quarters, even as quarterly sales improved from the previous period. Business Standard noted that sequential profit also eased, falling 4.4% from Q4FY26.
The quarter’s earnings growth was concentrated in financials and commodity-linked businesses. Banks, non-bank lenders and mining and metal companies together accounted for 66% of the year-on-year increase in corporate profits, up from 39% in the same quarter a year earlier. Their combined adjusted net profit rose 26.6% to ₹1.99 trillion, led by a 45% jump in mining and metals, a 28% rise in finance companies and a 20.3% increase at banks. By contrast, oil and gas firms saw profit fall 22.6%, even though revenues rose sharply on elevated energy prices.
Among individual companies, Hindalco was the biggest contributor to profit growth, with adjusted net profit up 116.7% to ₹8,677 crore, helped by a surge in global aluminium prices after supply disruptions linked to the conflict involving the United States, Israel and Iran. Punjab National Bank, Life Insurance Corporation of India, Bharti Airtel and JSW Steel also made major gains. Together, those five companies lifted combined adjusted net profit by 63.9% to ₹40,590 crore, accounting for about a quarter of the overall rise. Motilal Oswal Financial Services said earnings for the quarter were better than expected, with 49% of companies beating estimates and the upgrade-to-downgrade ratio reaching 1.5 times, the highest in at least 21 quarters.
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