India Inc’s Q1 revenue is set to jump 11%: here’s the surprising reason why

Corporate revenue is on track to grow 11-11.5% in the April-June quarter of FY27, according to a new estimate from ratings agency Crisil — but the driver behind the number marks a break from the past two years. Sehul Bhatt, director-research at Crisil, said pricing, rather than volume, is behind most of the growth this quarter, a reversal after companies leaned on sales volume to grow in the two years prior.

The shift comes as India’s corporate earnings season, already underway since last week, gathers pace through July. Reliance Industries reported its results on Friday, while HDFC Bank, ICICI Bank and Kotak Mahindra Bank followed with their own numbers on Saturday. Crisil said profits across companies reporting so far have grown consistently, even though some names missed analyst estimates.

Automobiles, white goods, telecom services, power generation, steel and healthcare all drew support from resilient domestic demand. Intense summer heat pushed up demand for air conditioners and other seasonal appliances, a sharp turnaround from a year earlier when heavy rains dampened sales. Power companies benefited from peak seasonal demand, telecom firms gained from premiumisation and data monetisation, and steelmakers were bolstered by stronger prices.

Not every sector is riding the wave. Construction is estimated to see revenue rise just 1-3% as delays in project execution, tied to geopolitical disruptions, pushed back revenue recognition despite healthy order books — infrastructure major L&T is due to report its Q1 FY27 numbers on 28 July. FMCG revenue is estimated to grow 6-7% on the back of price increases, though higher packaging, logistics and food-related costs have squeezed profitability; Axis Securities expects Nestle India, CCL Products and Varun Beverages to outperform their peers.

Building materials company Nuvoco Vistas Corp posted a 7% rise in operating profit to Rs 572 crore for the quarter — its highest-ever first-quarter operating profit — with managing director Jayakumar Krishnaswamy crediting cost discipline and operational efficiencies. Berger Paints managing director Abhijit Roy said the company expects ‘double digit value growth’ in the quarter, with an even stronger second and third quarter ahead, building on a weak year-ago period when excessive rainfall and an early Diwali had shortened the festive selling season.

Crisil expects overall corporate operating profit margin to contract by 75-100 basis points year-on-year, as companies absorbed part of the rise in costs rather than passing all of it on to consumers. Airlines were hit hardest, with rising aviation turbine fuel costs and softer passenger traffic estimated to drag operating margin down by around 1,000 basis points, while non-banking financial companies enter the results season in a stronger position, with better margins and asset quality after a period of retail lending stress. Crisil flagged the balance between further price hikes and demand, cost recovery without losing volumes, and relief in fuel, freight and raw material costs as the three factors that will shape earnings in the months ahead, alongside the monsoon’s impact on rural demand and food inflation.

Wikimedia Commons/by Appaiah