New Delhi (Economy India): Rating agency ICRA has projected that Indian companies are likely to witness a 5–6 percent revenue growth in the second quarter of the current financial year (July–September FY26). The outlook comes on the back of steady domestic demand, moderating inflation, and government-led infrastructure spending, which continue to provide resilience to India’s corporate sector.
Revenue Growth Outlook
ICRA noted that while the growth momentum remains intact, the pace of revenue expansion will be marginally slower compared to the previous quarter, when corporate India posted a 5.5 percent rise in revenues. The rating agency highlighted that the second quarter will see demand remain stable across key sectors such as consumer goods, automobiles, pharmaceuticals, and construction materials.
“Overall, India Inc. is expected to maintain a positive growth trajectory, though global uncertainties, interest rate trends, and raw material price volatility will continue to influence performance,” ICRA said in its latest quarterly report.
Key Sectors Driving Growth
- Automobile Sector: Passenger vehicle sales have remained strong, supported by festive season demand, new model launches, and improving rural sentiment. However, two-wheeler sales may remain subdued due to slower rural recovery in some pockets.
- FMCG & Consumer Goods: Urban consumption continues to support growth, while rural markets are gradually recovering as inflation eases. Price rationalisation in edible oils, cereals, and packaged foods is aiding demand.
- Pharmaceuticals: Exports to the US and other advanced markets are stabilising, while domestic demand for generics and healthcare products is buoyant.
- Infrastructure & Construction: Government-led capital expenditure on highways, railways, and housing continues to stimulate demand for steel, cement, and allied industries.
- IT & Services: Growth in the technology sector is expected to remain modest as global demand for outsourcing and IT services faces headwinds from cautious spending in the US and Europe.
Comparison with Previous Quarters
In the first quarter of FY26 (April–June), India Inc. recorded a revenue growth of 5.5 percent, driven largely by festive pre-bookings in autos, recovery in consumer spending, and steady demand in the pharmaceutical and steel industries.
However, the base effect and uneven recovery in exports mean that Q2 revenue growth may remain range-bound at 5–6 percent, according to ICRA’s estimates.
Challenges Ahead
Despite the positive outlook, ICRA has cautioned that several risks may impact corporate earnings in the coming months:
- Global Economic Slowdown: Weak growth in advanced economies could limit export demand for Indian goods.
- Commodity Price Volatility: Fluctuations in crude oil, natural gas, and metals could impact input costs for manufacturers.
- Interest Rate Trajectory: The Reserve Bank of India (RBI) has maintained a cautious monetary stance, and any prolonged high interest rate environment may impact borrowing costs and investment appetite.
- Geopolitical Uncertainty: Global supply chain disruptions and conflicts could weigh on trade and raw material availability.
Expert Opinions
Market analysts believe that India’s domestic demand strength will help offset some of the global headwinds.
“Indian corporates are well-positioned to deliver steady growth in Q2, supported by rural recovery and government infrastructure push. However, profitability margins may remain under pressure due to input cost fluctuations,” said a senior economist at a leading investment bank.
Outlook for FY26
ICRA expects that India Inc. will maintain a mid-single-digit revenue growth trend for the full fiscal year, supported by:
- Ongoing government capital expenditure programmes
- Revival in rural demand with better monsoon outlook
- Continued strength in urban consumption
- Recovery in select export-oriented sectors
Overall, the report suggests that while challenges remain, India’s corporate sector is showing signs of steady resilience and remains a key pillar in sustaining the country’s overall GDP growth, which is projected to be 6.4–6.7 percent in FY26.
(Economy India)
