Crisil Intelligence, the research arm of rating agency Crisil, has estimated that India Inc’s revenue will grow 16-16.5% year-on-year (Y-o-Y) in the second quarter of the current fiscal (Q2FY27), moderating from 17.4% in Q2FY26. In its latest quarterly analysis of corporate performance, the agency said profitability is expected to remain broadly stable at June-quarter levels. Domestic demand continued to support growth, with automobiles, power, metals and consumer staples emerging as the largest contributors. Firmer commodity realisations and favourable currency translation effects also supported revenue growth in select export-oriented sectors.
Aggregate earnings before interest, taxes, depreciation and amortisation (Ebitda) margin is expected to remain broadly stable sequentially at 18.2-18.6%, although this masks divergent trends across sectors. Commodity producers benefited from stronger realisations, while several downstream and consumer-facing sectors likely absorbed part of the increase in input costs to protect demand and sustain volume growth. Rural-linked segments of the automobile industry showed signs of losing momentum in Q2FY27. Revenue growth in the two-wheeler segment is estimated to have slowed sharply to around 12% from more than 36% in the previous quarter. Tractor revenue growth is also likely to have moderated by around 2%, indicating uneven demand across the broader automobile sector.
In contrast, passenger vehicle revenue is estimated to have risen around 24% in Q2, supported by an expected 20% increase in volumes, premiumisation and a favourable product mix. The segment also benefited from demand momentum following the rationalisation of goods and services tax (GST) rates, although this tailwind appears to have largely played out by the end of the quarter. Commercial vehicle revenue is estimated to have grown around 21%, aided by freight activity, replacement demand and an estimated 18% increase in volumes. However, manufacturers appear to have restrained price increases despite higher costs, prioritising volume growth amid the ongoing upcycle. Within the automobile sector, Ebitda margins are estimated to have contracted by around 290 basis points (bps) in the passenger vehicle segment, despite strong revenue growth. Margins in the automotive components and two-wheeler segments are estimated to have declined by around 100 bps and 150 bps, respectively. The pressure reflects manufacturers absorbing a larger share of input-cost inflation to sustain volume momentum.
Conversely, commodity producers recorded some of the strongest margin gains. Aluminium producers’ margins are estimated to have expanded by around 1,540 bps, while those of blast-furnace steel producers widened by around 260 bps. Domestic flat-steel prices were around 17% higher Y-o-Y. However, steel revenue growth remained largely price-driven, with realisations estimated to have increased by 10%, compared with volume growth of just around 2%. Power generation revenue is estimated to have advanced around 23%, while cement revenue growth was more moderate at around 9%. Average cement prices are estimated to have declined by 6%, despite volume growth of around 6%.
Among consumer-facing sectors, fast-moving consumer goods (FMCG) revenue is estimated to have grown 10.5%. Companies responded to higher edible oil and other input costs by raising prices and reducing pack sizes. Sector margins are estimated to have declined by around 100 bps. IT services revenue grew around 12% in rupee terms. However, currency depreciation likely provided significant support, potentially masking underlying demand weakness, as discretionary enterprise spending remained cautious. Airlines faced the sharpest profitability pressures. Passenger volumes are estimated to have declined by 4%, even as fare realisations rose 18%. Higher aviation turbine fuel costs and capacity constraints are estimated to have contributed to an Ebitda margin contraction of more than 1,200 bps.
