Chennai: Despite the relief due to potential thaw in West Asian conflict, the revenue growth of India Inc will remain moderate to mid-to-high single digit in June quarter, down from 13.2 per cent in the previous March quarter. Operating margins too may moderate by 100-150 bps in Q1 FY2027 due to higher crude oil prices, high logistics costs and costlier imports due to rupee depreciation.
The double-digit revenue growth of ICRA’s sample set of 2685 listed companies in Q4 FY2026 was led by consumption-oriented sectors like automobiles and retail, supported by premiumisation trends and the continued shift in market share towards organised players. A rally in prices of gold and non-ferrous metals boosted revenues of jewellery retailers and non-ferrous metal producers, while the capital goods sector contributed to the growth on the back of healthy order execution. However, geopolitical tensions and the emergence of El Niño conditions may dampen revenue growth of a large section of the corporate sector in Q1 FY2027.
However, domestic demand conditions have become more nuanced in Q1 FY2027, with below-normal monsoon expectations posing downside risks to demand across rural-linked segments such as fast-moving consumer goods (FMCG), two-wheelers, tractors, and agrochemicals. While stable income trends are likely to support urban consumption to some extent, the overall demand environment is likely to remain challenging due to inflationary pressure amid a surge in crude oil prices and rupee depreciation, constraining volume growth in consumption-oriented sectors.
While a potential thaw in the West Asian conflict promises to offer some relief, the unstable equilibrium may remain an overhang, influencing global trade flows, logistics costs and demand sentiments in key export markets. Further, the conflict results in a second-order impact on travel and tourism-linked businesses like aviation and hotels targeting foreign tourists, LPG-dependent industries like ceramic tiles, quick service restaurants, among others.
The aggregate operating profit margin (OPM) remained resilient, improving marginally by 12 bps YoY to 16.1% in Q4 FY2026. Margins expanded in sectors like iron and steel, non-ferrous metals, oil and gas, and telecom in Q4 FY2026, but were partly offset by contraction in sectors like airlines, power and real estate. ICRA estimates the aggregate OPM to moderate by 100-150 bps in Q1 FY2027 due to higher crude oil prices, high logistics costs and costlier imports due to rupee depreciation, which will partially offset the benefits of price hikes, cost rationalisation and favourable currency movements for exporters.
Disclaimer : This story is auto aggregated by a computer programme and has not been created or edited by DOWNTHENEWS. Publisher: deccanchronicle.com
