India Inc witnessed its fastest revenue growth in 15 quarters during Q1FY27, with combined net sales surging 18.4% year-on-year and net profit increasing by 16%, even as higher energy prices led to a contraction in operating margins.
Illustration: Uttam Ghosh
Key Points
- India Inc recorded its fastest revenue growth in 15 quarters during Q1FY27, with combined net sales increasing by 18.4% year-on-year to approximately Rs 47.27 trillion.
- Adjusted net profit for 3,458 listed companies rose 16% year-on-year to around Rs 4.58 trillion in Q1FY27, led by strong performances in mining, metals, and banking and finance sectors.
- Despite robust revenue growth, companies faced a contraction in operating and net profit margins due to escalating commodity and energy prices, which pushed up input costs.
- Mining and metal companies, along with finance and banking sectors, were the primary drivers of earnings growth, contributing 66% to the overall increase in corporate profits.
- Oil and gas companies were significant laggards, with their combined adjusted net profit declining 22.6% year-on-year, despite high double-digit revenue growth.
Listed companies reported strong earnings growth in the April-June quarter of 2026-27 (Q1FY27), with double-digit growth in both net sales and net profit, led by mining and metals, and banking and finance companies.
The combined adjusted net profit of 3,458 companies in the Business Standard sample rose 16 per cent year-on-year (Y-o-Y) to around Rs 4.58 trillion in Q1FY27, from around Rs 3.95 trillion a year earlier. In comparison, adjusted net profit had risen 8.9 per cent Y-o-Y in Q1FY26 and 16 per cent in Q4FY26.
Sequentially, however, quarterly profit declined 4.4 per cent from around Rs 4.79 trillion in Q4FY26.
The combined net sales of these companies (gross interest income in the case of banks and non-bank lenders) rose 18.4 per cent Y-o-Y to around Rs 47.27 trillion in Q1FY27, from Rs 39.93 trillion in Q1FY26.
This was the fastest revenue growth recorded by the listed companies in 15 quarters.
Their combined net sales had grown 6 per cent Y-o-Y in Q1FY26 and 11.8 per cent in Q4FY26.
Sequentially, net sales were up from around Rs 46.34 trillion in Q4FY26.
Margin Contraction Amidst Rising Costs
Despite the strong revenue growth, companies reported a contraction in operating and net profit margins as higher commodity and energy prices pushed up input costs during the quarter.
The operating profit margin, or Ebitda (earnings before interest, taxes, depreciation and amortisation) margin, of companies excluding banks, finance, insurance and stock broking (BFSI) firms declined by nearly 200 basis points (bps) Y-o-Y to 16.9 per cent of total income in Q1FY27, from nearly 18.9 per cent in Q1FY26.
It was also lower than 19.2 per cent in Q4FY26 and was the lowest operating margin for these companies in 13 quarters.
Their adjusted net profit margin declined by nearly 50 bps Y-o-Y to 7.4 per cent of overall revenue, from 7.9 per cent in Q1FY26.
It was also down from 8.1 per cent in Q4FY26.
One basis point is one-hundredth of a percentage point.
The combined expenditure on raw materials and power and fuel of non-BFSI companies rose 29.5 per cent Y-o-Y in Q1FY27, the fastest pace in 15 quarters.
This outstripped the 21.2 per cent growth in their combined net sales, which was the fastest since the December 2022 quarter.
As a result, the combined adjusted net profit of companies excluding BFSI rose 12.7 per cent Y-o-Y to Rs 2.79 trillion in Q1FY27, marking the slowest growth in four quarters.
Sectoral Performance Highlights
“The Q1FY27 earnings have been better than estimates, with the intensity of earnings cuts moderating. Further, the beat-miss ratio for our Universe remains favourable.
“About 49 per cent of the companies exceeded our estimates, while 22 per cent reported a miss at the net profit level,” analysts at Motilal Oswal Financial Services wrote in their interim review of Q1FY27 earnings.
The brokerage stated that 19 sectors exceeded its expectations, while the upgrade-to-downgrade ratio turned favourable rising to 1.5x, the highest in at least 21 quarters.
Banks, non-bank lenders, and mining and metal companies were the biggest earnings driver during the quarter, together accounting for 66 per cent of the overall growth in the corporate profits on Y-o-Y basis in Q1FY27.
This was much higher than their 39 per cent contribution to overall corporate profits in Q1FY26.
The three sectors reported a combined adjusted net profit of Rs 1.99 trillion in Q1FY27, up 26.6 per cent Y-o-Y from around Rs 1.57 trillion in Q1FY26.
Mining and metal companies topped the earnings growth chart, with their combined net profit rising 45 per cent Y-o-Y, followed by finance companies, where profit grew 28 per cent, and banks, which recorded 20.3 per cent growth.
The combined net profit of the rest of corporate India rose 9 per cent Y-o-Y to around Rs 2.6 trillion in Q1FY27, from around Rs 2.38 trillion in Q1FY26.
Meanwhile, the combined net sales (gross interest income in the case of banks and non-bank lenders) of banks, finance companies, and mining and metal firms rose 12.3 per cent Y-o-Y to around Rs 12.1 trillion in Q1FY27, from around Rs 10.8 trillion a year earlier.
In contrast, companies in the oil and gas sector were among the biggest laggards, with their combined adjusted net profit declining 22.6 per cent Y-o-Y to Rs 38,650 crore in Q1FY27, from Rs 57,248 crore in Q1FY26.
However, their revenues recorded high double-digit growth, aided by elevated oil and gas prices amid the conflict in West Asia.
Their combined net sales rose 29.5 per cent Y-o-Y to around Rs 10.1 trillion in Q1FY27, from around Rs 7.8 trillion in Q1FY26.
Top Performers and Laggards
Among individual companies, non-ferrous metals producer Hindalco contributed the most to the growth in corporate earnings in the first quarter, aided by a sharp rise in global aluminium prices following supply disruptions caused by the US-Israel war on Iran.
The company’s adjusted net profit rose 116.7 per cent Y-o-Y to Rs 8,677 crore in Q1FY27, accounting for 7.4 per cent of the overall increase in corporate earnings during the quarter.
It was followed by Punjab National Bank (PNB), whose earnings rose 213.6 per cent Y-o-Y, Life Insurance Corporation of India (24 per cent), Bharti Airtel (41.6 per cent), and JSW Steel (113 per cent).
The combined adjusted net profit of these five companies rose 63.9 per cent Y-o-Y to Rs 40,590 crore in Q1FY27.
Together, they accounted for around a fourth of the overall increase in corporate earnings during the quarter, compared with a much smaller contribution to overall profits in Q1FY26.
At the other end of the spectrum, Bharat Petroleum Corporation (BPCL), Indian Oil Corporation (IOC), InterGlobe Aviation, Tata Motors Passenger Vehicles, and ITC were the biggest laggards in Q1FY27.
The first three companies reported quarterly losses, compared with net profits a year earlier, while the adjusted net profits of Tata Motors Passenger Vehicles and ITC declined 69.5 per cent and 22.2 per cent Y-o-Y, respectively.
