India Inc revenue growth at 2-year high of 11-11.5%, margins fall: Crisil

Corporate revenue is estimated to have grown 11-11.5 per cent in the June quarter as companies raised prices, but higher fuel and freight costs squeezed margins

Indian companies are estimated to have posted their fastest revenue growth in two years in the April-June quarter, according to Crisil Intelligence. But much of that growth came not from selling more, but from charging more.

 

An analysis by Crisil Intelligence, based on more than 400 companies across 47 sectors, showed revenue grew 11-11.5 per cent year-on-year (Y-o-Y) in the first quarter of 2026-27 and 9.6 per cent sequentially. These companies account for nearly half of India’s listed market capitalisation. Their combined quarterly revenue is estimated at ₹14.9-15.1 trillion.

 

However, profit margins likely fell by 75-100 basis points as companies struggled with higher fuel, freight and raw material costs.

 

The big change: Prices are doing more of the work

“For much of the past two years, revenue growth was powered largely by volume. But this time around, pricing was the primary driver, contributing more to revenue growth than volume in sectors such as aluminium, steel, cement, airlines, fertilisers and gems and jewellery. To be sure, growth was not uniform, but it was broad-based enough to prop the aggregate number,” said Sehul Bhatt, director, Crisil Intelligence.

 

Airlines offered one of the sharpest examples of this trend. Revenue is estimated to have increased 18-20 per cent even though passenger volumes fell 3-5 per cent, as fares rose 23-25 per cent amid higher aviation turbine fuel costs.

 

In cement, prices contributed about 4 percentage points to growth, while volumes added around 3 percentage points. Steel also saw a larger contribution from prices than in earlier quarters. Telecom growth was largely driven by better realisations as consumers moved to costlier plans.

 

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Why margins came under pressure

The West Asia conflict had already pushed up commodity and energy costs before the June quarter, but many companies entered the period with inventories bought at older and lower prices. As those stocks were replenished, the cost shock began to show up.

 

Industrial diesel prices rose nearly 50 per cent and commercial LPG rates jumped around 75 per cent, according to Crisil Intelligence.

 

“Margin pressure was most pronounced in sectors where pre-escalation inventory cushions gradually depleted,” said Pushan Sharma, director, Crisil Intelligence.

 

Companies raised prices, but could not pass on the full cost increase. FMCG firms hiked prices by 4-10 per cent, while automakers, cement companies and airlines also charged more.

 

As a result, aggregate earnings before interest, taxes, depreciation and amortisation (Ebitda) margin is estimated to have fallen to 19-19.5 per cent from 20.2 per cent a year earlier, even as revenue growth hit an eight-quarter high.

Autos, aluminium lead revenue growth

Automobiles were among the biggest contributors to corporate revenue growth. Sector revenue is estimated to have increased 22-24 per cent Y-o-Y, helped by GST-led demand momentum, strong passenger vehicle and two-wheeler sales, commercial vehicle demand, exports, and selective price increases.

 

Passenger vehicle retail sales rose 25 per cent Y-o-Y, while commercial vehicle sales grew 15 per cent. Automobile export volumes are estimated to have risen 19-21 per cent, supported by demand from Japan and Africa.

 

For cars and utility vehicles, Crisil estimates volume growth of about 25 per cent and a roughly 5 per cent contribution from prices. Commercial vehicle makers benefited from price increases of 1.5-2 per cent announced in April. But higher aluminium and plastic prices are expected to have weighed on margins.

 

Aluminium emerged as the standout performer, with revenue estimated to have surged 51-53 per cent Y-o-Y. Supply disruptions tightened availability and pushed up global prices, with the Gulf Cooperation Council region accounting for about 9-10 per cent of production. Crisil estimates aluminium prices rose 27 per cent Y-o-Y.

 

Unlike many energy-intensive sectors, domestic aluminium producers were better placed to protect profitability because their operating costs remained comparatively stable while global selling prices increased.

Steel, cement, power provide support

Steel revenue is estimated to have grown about 15 per cent Y-o-Y, supported by higher prices, steady domestic demand and better exports.

 

Cement revenue likely grew 6-8 per cent as companies raised prices to recover part of the increase in freight, fuel and power costs. However, higher packaging, power and fuel expenses are expected to have reduced sector margins by 250-300 basis points.

 

Power generation was more resilient. Revenue is estimated to have increased 8-10 per cent, supported by an estimated 8 per cent rise in peak power demand. The sector was also better placed to protect profitability because of stronger mechanisms to pass through costs.

 

In construction, revenue grew only 1-3 per cent despite healthy order books, as geopolitical disruptions slowed project execution and delayed revenue recognition.

 

Consumer-facing businesses such as FMCG are estimated to have grown 6-7 per cent Y-o-Y. Strong demand allowed companies to raise prices by 4-10 per cent, but higher packaging, logistics and food-related expenses hurt profitability.

 

Telecom services revenue grew 10-11 per cent, supported by premiumisation, data monetisation, migration to postpaid plans and subscriber upgrades. Ebitda margins are estimated to have risen by 50-80 basis points.

Export-linked sectors face pressure

Companies dependent on overseas markets and shipping routes had a harder quarter. Textiles, pharmaceuticals and processed food companies faced higher freight rates and longer shipping schedules.

 

Pharmaceuticals still managed revenue growth of around 12 per cent, helped by domestic demand, new product launches and exports to semi-regulated markets. But higher raw material, power, packaging and logistics costs, along with pricing pressure in the US market, weighed on margins.

 

IT services revenue grew only about 5 per cent, with support coming from favourable currency movements as a weaker rupee helped export earnings. IT-enabled services fared slightly better, with revenue estimated to have grown about 7 per cent.

Airlines and tyres see sharp margin pain

Airlines faced one of the steepest margin declines. Even after raising fares by 23-25 per cent, the sector could not fully offset higher aviation turbine fuel costs and weaker passenger traffic. Ebitda margins are estimated to have fallen by about 1,000 basis points.

 

Tyre makers faced sharp increases in natural rubber, carbon black and synthetic rubber costs. Their margins are estimated to have declined by 200-300 basis points.

 

Fertiliser companies were hit by higher gas, ammonia, sulphur and phosphoric acid prices. Revenue still grew 8-10 per cent, helped by strong sales in April and May, precautionary purchases amid fears of shortages, and higher prices.

 

Chemicals, petrochemicals, packaging and other sectors exposed to crude oil, natural gas, imported inputs and logistics also faced pressure.

 

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What happens next?

According to Crisil, corporate performance in the coming quarters will depend on whether companies can continue raising prices without hurting demand.

 

The research and analytics company has identified three factors that will shape performance: the extent of further price increases, whether companies can protect volumes while recovering higher costs, and how quickly pressure from fuel, freight, feedstock and packaging begins to ease.