Automobiles, retail, consumer durables and hospitality, which are dependent on domestic demand, are expected to outperform export-oriented industries such as IT, apparel and cut-and-polished diamonds
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Rating agency ICRA on Thursday projected India Inc’s revenue growth to moderate to 13-15 per cent in the July-September quarter of 2026-27, down from the 21.3 per cent year-on-year growth recorded in Q1 by its sample of 2,756 listed non-financial companies.The agency also warned that operating profit margins (OPM) could contract by 100-150 basis points on a year-on-year basis in Q2, pressured by elevated raw material, fuel, freight and packaging costs, costs that have risen largely due to the ongoing West Asia conflict and the depreciation of the rupee against the dollar.Despite the margin squeeze, ICRA expects India Inc’s interest coverage ratio to remain resilient at 4.9-5.2 times in Q2 2026-27, broadly in line with the 5.1 times recorded in Q1.Domestic consumption, festive season trade stocking and favourable commodity realisations are expected to support topline growth. However, several companies have raised prices to pass on cost increases, which is likely to dampen volume growth even as value-led growth continues.Sectors dependent on domestic demand, automobiles, retail, consumer durables and hospitality, are expected to outperform export-oriented industries such as IT, apparel and cut-and-polished diamonds, which face weak global demand and rising trade protectionism.On the margins front, oil refiners, aviation, FMCG and cement companies face the sharpest pressure. Metals, mining, telecom and select utilities are better positioned due to favourable realisations or cost pass-through mechanisms.A key downside risk flagged by ICRA is the below-normal rainfall forecast for August-September, which could weaken rural demand and push up food inflation, weighing on agri-linked and rural-focused sectors in the coming quarter.Published on August 27, 2026
