Indian companies reported stronger-than-expected revenue growth in the first quarter, showing resilience despite sector-specific challenges and rising costs, as analysts remain cautious about the outlook amid geopolitical tensions and sectoral headwinds.
Corporate India delivered a more resilient first quarter than many analysts had feared, even as the earnings picture remained uneven across sectors. According to The Hindu BusinessLine, 4,220 companies had reported results by Friday, showing year-on-year revenue growth of 21% and profit after tax growth of 14%. The gap between sales and profit reflected higher material costs, but the broader trend suggested that demand held up better than the market had expected when the quarter began under the shadow of Middle East tensions and a sharp move in oil prices.
The strength was less pronounced once banks, financial services and insurers were stripped out. The BusinessLine analysis said that among 593 BFSI companies, revenue rose 24% while adjusted profit increased only 8%. Excluding another 48 companies in refining, power and gas distribution that were hit by oil and gas marketing losses, the remaining firms posted a more balanced 22% rise in both sales and profits. Even there, gross margins fell 333 basis points, though EBITDA margins declined by a smaller 110 basis points as higher volumes helped absorb some of the cost pressure.
That mixed picture fits with other recent industry assessments. ICRA said Corporate India posted 5.5% revenue growth in the June quarter, with operating margins improving by 7 basis points to 18.1% as easing input costs helped commodity-linked businesses. CRISIL, meanwhile, estimated that revenue growth slowed to 4% to 6% year on year, with EBITDA up 4% and margins under strain in sectors including IT, autos, fast-moving consumer goods and pharmaceuticals. Taken together, the reports point to a quarter in which top-line momentum was stronger than many feared, but not strong enough to fully offset cost pressures.
Some of the sharpest stress came in refining and marketing, where fuel under-recoveries and LPG losses were expected to bite. The Hindu BusinessLine reported that Reliance Industries posted 7% profit growth because its exposure to marketing losses was limited, while Bharat Petroleum and Hindustan Petroleum saw much steeper declines. Indian Oil said LPG under-recovery had eased from ₹665 a cylinder in early April to ₹250, helped by alternative supply and softer crude prices, price increases and a cut in excise duty. The picture in information technology was also subdued, with constant-currency growth staying below 1% to 2% and a recovery now being pushed back to the second half of FY27.
By contrast, banks, non-bank lenders, autos, power, steel and parts of pharmaceuticals and consumer goods showed more resilience. The BusinessLine report said credit growth remained strong, though deposit growth lagged, which could force banks to raise deposit rates and pressure net interest margins. In autos, demand stayed firm and companies continued to pass through higher commodity costs, even if margins came under strain. Power demand picked up again in May 2026, while steel and cement benefited from volume gains and easing input costs. Pharma remained uneven, with some companies hurt by product transitions and API issues, but others, including Divi’s Laboratories, still posting strong growth. The overall message from the quarter is clear: India Inc avoided the gloom that hung over the start of the period, but the recovery is still broad rather than deep, and vulnerable to costs, geopolitics and sector-specific shocks.
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