India Inc to report stable revenue growth in Q1 FY26; export-oriented sectors to face the heat: ICRA

In a statement, ICRA said it forecasts India Inc's operating profit margins (OPM) at 18.2-18.5% in the first quarter (April-June) of FY26, following the sequential recovery over the past few quarters.

Along with this, a moderation in interest costs owing to the recent repo rate cuts aggregating to 100 bps will result in an improvement in the interest coverage ratio for India Inc., ICRA added.

"Given the uncertain global environment, ICRA expects the private capital expenditure cycle to remain measured. However, certain sunrise sectors, such as electronics, semiconductors, and niche segments within the automotive space, such as electric vehicles, will continue to see a scale-up in investments," ICRA Senior Vice President Kinjal Shah said.

Entities linked with the Indian Railways and defence sectors would also see their large order books translating into revenues and earnings, Shah added.

"India Inc. is expected to report stable revenue growth in Q1 FY2026 supported by resilient domestic demand. While rural demand is expected to remain healthy, urban demand looks set to recover, supported by income tax relief and easing food inflation," ICRA said.

Nonetheless, the ongoing geopolitical tensions continue to impact demand sentiments, especially for export-oriented sectors such as agrochemicals, textiles, autos and auto components, cut and polished diamonds, and IT services, it added.

Q4 FY25 Results Review

The combined net profit (adjusted for exceptional gains and losses) of 1,555 companies (excluding their listed subsidiaries) grew 6.6% year-on-year (Y-o-Y) in Q4 FY25, well above most analyst estimates.

"In their earnings previews, various brokerages had projected Y-o-Y growth of -5% to 1% for companies in their coverage universe," the report added.