Credit rating agency, Icra in its latest report has said that India Inc. is expected to report stable revenue growth in Q1 FY2026, on the back of resilient domestic demand. The agency said that rural demand is expected to remain healthy, while urban demand looks set to recover supported by income tax relief and easing food inflation. However, the ongoing geopolitical tensions continue to impact demand sentiments, especially for export-oriented sectors such as agro-chemicals, textiles, auto and auto components, cut and polished diamonds, and IT services.
ICRA’s analysis of the performance of 589 listed companies (excluding financial sector entities) in Q4 FY2025 revealed 7.6% YoY revenue growth, supported by improved demand across consumption-oriented sectors like consumer durables, retail, hotels and airlines as well as infrastructure-oriented sectors like power, real estate and construction. On the other hand, sectors like iron and steel saw some decline, following lower realisations owing to weak global demand and influx of cheaper imports from China.
As per the rating agency, the recovery in the operating profit margins (OPM) for India Inc. witnessed over the past quarters is likely to be sustained at around 18.2-18.5% in Q1 FY2026, supported by robust demand owing to improved consumer sentiments and softening of some input costs like crude oil, coal and steel. Coupled with the expected decline in interest costs following the rate cuts, this shall lead to an improvement in the interest coverage ratio to around 5.1-5.2 times in Q1 FY2026.
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