India Inc. is estimated to have posted 8.5–9% year-on-year revenue growth in the March quarter of FY26, supported by sustained volume momentum in automobiles and white goods following GST rate rationalisation, according to a report by Crisil Intelligence.

The growth reflects the tailwind from the Goods and Services Tax (GST) rate cut in September 2025, which improved affordability and drove demand recovery across consumption-driven sectors. The momentum, however, is expected to soften slightly to 8–8.5% in the first quarter of FY27 as price hikes triggered by geopolitical tensions, particularly in West Asia, begin to weigh on demand.

The report highlights that while revenue growth remained resilient through the March quarter, the composition has begun to shift. After nearly two years of volume-led expansion, growth is increasingly becoming price-driven, except in segments that directly benefited from GST rationalisation.

Geopolitical risks begin to filter through

The ongoing West Asia conflict has started impacting sectors linked to energy, trade and logistics, with second-order effects such as higher freight costs, longer transit times and working capital pressures beginning to emerge. India’s high dependence on crude and gas imports routed through the Strait of Hormuz adds to the vulnerability.

“In the first quarter of fiscal 2027, margin pressure is expected to broaden and deepen, driven by inventory roll over and replacement cost reset as companies navigate an increasingly tight trade-off between passing on higher input and logistics costs and preserving demand,” said Miren Lodha, Senior Director, Crisil Intelligence. She added that aggregate margins could decline 75–100 basis points year-on-year to a 12-quarter low.

Margins diverge across sectors

Operating margins are estimated to have declined 25–50 basis points on-year in Q4 FY26, with sharper contractions of around 100 basis points in sectors heavily dependent on crude derivatives, such as chemicals, fertilisers and aviation.

“Sectoral margin dynamics diverged sharply in the fourth quarter. Sectors with direct exposure to supply disruptions in West Asia faced substantial profitability challenges, while construction-linked sectors likely saw margin expansion,” said Sachidanand Choubey, Associate Director, Crisil Intelligence.

He cautioned that any increase in retail fuel prices could further strain logistics-intensive sectors such as cement, metals, mining and e-commerce.

Outlook: growth steady, but risks rising

While GST-led formalisation and consumption continue to support topline growth, rising input costs, freight disruptions and global uncertainties are expected to weigh on both revenue momentum and profitability in the coming quarters.